After successfully selling the Safaricom IPO, Dyer and Blair Securities Rwanda has been hired to act as the sponsoring broker for the Kigali City Council (KCC) bond.

The company is a subsidiary of Dyer and Blair Investment Bank.

According to a memorandum of understanding signed between the two institutions, Dyer and Blair is now charged with marketing and selling the only municipal bond in East Africa.

This bond is to be floated on Rwanda over the counter market by August 31, this year.

The deal also requires that Dyer and Blair Investment comes up with the price and other features of the bond.

Kigali is opting for public borrowing raise funds to develop the city.

The money will help in the city implementation of the recently approved Kigali City Master Plan. That wants to turn the city into a modern urban area with state of the art facilities.

Dr. Aisa Kirabo Kacyira, the Mayor KCC said that they are seeking Frw5 billion. The money will if for acquiring 500 hectares of land for development.

She said 52 hectares of land are at Kimihurura gateway and 200 hectares at Kinyinya.

Experts concerned
The issuance of the municipal bond has raised concerns from economists and financial experts in the country. Some want to know whether this municipal bond will offer guarantee covers.

To cushion investors against any likely shocks, the Governor of the National Bank of Rwanda (BNR), Françoise Kanimba, suggests that the bond ought to be risk free like the government Treasury bonds.

He said investors need such a guarantee as the capital market in the country is still young and dominated by participants with limited knowledge on risk management.

Other stakeholders are eager to know whether there are any success stories of municipal bonds in Africa and East Africa in particular.

The Nairobi City Council used to issue municipal bonds of as many as 25 years, but when these were redeemed in the 1980s, similar ones were not issued.

"All bonds in the region have no guarantee. This development (municipal bond) was there in Kenya but failed due to governance issues,” said Robert Marthu, Executive Director of Rwanda Capital Markets Advisory Council. 

Simon Peter Karenzi, Chief Executive Officer of Dyer and Blair Securities Rwanda, said that they are considering options of setting up a special purpose vehicle to own the asset and repay the loan.

This implies that a private company could own the bond and be responsible for repayment.

At least this would give some self-confidence to the investors, knowing there is limited risk of default on payment.

Dyer and Blair Investment Bank is required to execute bond structuring, information memorandum preparation and regulatory processes.

Karenzi said Dyer and Blair shall also assist KCC to put in place a sustainable financial management system and strengthen good corporate governance.

Ends