appetite for government paper has continued to grow among ordinary Rwandans as indicated by the results of the Rwf10 billion five-year Treasury bond issuance released yesterday.

According to a statement from the National Bank of Rwanda (BNR) the participation of retail and individual investors hit a record high of 29 per cent for the August 23 bond issuance. The highest participation by retailers had previously been registered at 19.5 per cent during the February TB issuance.

Banks also made gains overtaking institutional investors (28 per cent) and scooping 43 per cent of the total amount offered, the statement signed by the central bank governor John Rwangombwa indicates.

This was an increase from 5.86 per cent during the May issuance, while allocation to banks was at 10 per cent, and 84.14 for institutional investors.

Commenting on the results, Davis Gathaara, the managing director of Baraka Capital Limited, a local brokerage firm, the improved subscription from retail investors and banks is encouraging "because they are all participating in economic development and looking long-term.”

He believes more people can get involved especially if they know they can trade the bonds on the local exchange make a profit and reinvest in subsequent issues.

"What we would like to see is more activity on the RSE, but bondholders want to hold them to maturity. I am optimistic that as our market deepens and investor education is increased, we will see more activity,” he said.

The government is using its bond programme wisely, and it is a contribution to stable economic growth and self-reliance.

At 222.03 per cent subscription rates, the August 23 issuance received one of the highest levels of participation since the TB issuance programme started in 2014.

The central bank received 66 applications from a range of investors for the issuance.

The seven-year Rwf10 billion Treasury bond issued in May received a 103.03 per cent subscription rate.

The bond’s coupon rate was set at 12.2 per cent, and investors will be paid semi-annually, according to the central bank.

The bond is scheduled for listing on the Rwanda Stock Exchange on August 29, while the next TB issuance, a seven-year bond, is planned for November 22, BNR said.

Government has been issuing regular bonds since 2014 under its quarterly TB issuance programme to fund infrastructure projects and support development of the local capital market.

Awareness drives paying off

Rwangombwa attributed the high subscription level among the different categories of investors to the continuous awareness campaigns by RSE, the Capital Market Authority and government to encourage Rwandans to embrace a savings culture by investing in government Treasury bonds.

Stock market stakeholders have since 2014 been carrying out different awareness drives to educate the public on the importance of saving and investing in government paper.

Gathaara said the low participation from institutional investors this time around could be that most of the big players have reached their internal or statutory designated quota of investment in debt.

"The Government of Rwanda is issuing quite a number of bonds especially in the last two years and some institutions would want to avoid exposure. Besides, some of these institutions may also have invested in higher yielding bonds elsewhere,” he said.

Half-year performance

The bond market recorded Rwf3.4 billion turnover in the first half of the year, up from Rwf514 million, indicating a 561 per cent growth compared to the same period last year. It registered 90 deals or 200 per cent increase compared to 30 deals in 2015.