The Rwanda Capital Market Authority (CMA) has given a greenlight to the Development Bank of Rwanda (BRD) to issue a second sustainability-linked bond (SLB) worth Rwf30 billion in its latest fundraising, the company announced.
The bond has a maturity of 7 years, and it will pay an annual interest rate of 12.9 per cent to investors. It will be available for purchase from September 2 to September 20, and investors must purchase a minimum of Rwf100,000 of the bond.
The issuance of the second tranche of the sustainability-linked bond gives BRD an option to issue up to additional Rwf5 billion. It follows the successful issuance last year in which the firm raised Rwf30 billion.
ALSO READ: BRD issues Rwf 30bn bond
Like any sustainability-linked bond, BRD’s latest bond targets environmentally conscious investors. It is part of BRD’s broader Rwf150 billion Medium Term Note (MTN) programme that targets investors committed to environmental, social and governance (ESG) issues.
"By issuing our second sustainability-linked bond, we reaffirm our commitment to incentivising borrowers to set meaningful sustainability targets while maintaining the innovative step-down coupon from the first tranche,” said Kampeta Sayinzoga, chief executive officer of BRD.
The first SLB was issued last year and it was oversubscribed by 110.59 per cent. This, BRD executives said, has given them the confidence to continue using capital markets to fund its growth initiatives.
According to BRD, the second issuance will further strengthen the bank’s focus on environmental, social, and governance (ESG) initiatives. It will also improve access to capital for key sectors such as women-led businesses and affordable housing.
By tying the bond’s performance metrics to specific sustainability targets, BRD said it is setting a new standard for responsible investment and positive societal impact.
"Investors are increasingly looking for opportunities that offer both financial returns and positive societal impact. With this SLB, BRD aims to attract responsible investors who share the principles of sustainable finance,” Kampeta said in a statement.
ALSO READ: Why ESG investors are pouring money into Rwanda
The bond structure includes a partial credit enhancement, which means that it is supported by a third party – in this case the World Bank – which reduces the risk for investors. It is part of the World Bank’s lending operation to the government of Rwanda through a facility dubbed Hatana-ERF2.