The government bond market is not performing according to the initial expectation by the National Bank of Rwanda (NBR), Governor François Kanimba has said. 

The Central Bank boss attributed the poor performance of the treasury bonds which are listed on the Rwanda Over-The-Counter (ROTC) bourse to the low investor participation that is reflected by irregular trading.

"We are not happy with the performance of the listed treasury bonds and we need to encourage the development of the capital markets,” explained Kanimba.

In 2008, government issued three treasury bonds that were listed on the ROTC market, raising Rwf14.3 billion. This year it has so far issued one bond worth Rwf2.5 billion with plans to raise Rwf10 billion from other three more treasury bonds by the end of the year.

According to the Governor, the yielding of the bonds on the market has been fluctuating, hence low participation.

The low activity on the bond market, which is largely dominated by institutional investors, is  attributed to the limited awareness within individual investors.

The ROTC market is still in its infant stage with only three treasury bonds, one BCR corporate bond and a cross listing by Kenya’s KCB.

Kanimba said that the low activity on the ROTC market is also partly a result of the poor performance of the government treasury bonds.

"It is important to have many securities on the market as it creates confidence among investors,” Kanimba explained.

He mentioned that the funds government raised from the bonds will not be allocated to any specific projects since the motive of issuing them is to develop the financial market.

However, he stresses that soon government will issue an infrastructure bond to finance some of its infrastructure projects.

It is noted that the banks and other financial institutions are participating on the market more than any other player because they understand the market very well.

The treasury bond that was issued early this year will attract a coupon rate of 9.5 percent.

This is part of the government effort to encourage the performance and growth of the stock market.

In order to create awareness about the importance of participating on the capital markets, the Capital markets Advisory Council (CMAC) has been involved in a national wide awareness program informing the public which products are available on the market and the benefits in investing there.

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