Eurobond: Gatete says fund is for investment

Despite investors’ appetite for Rwanda’s sovereign debt, the Rwandan government will not rush into acquiring more debts, but will instead maintain prudent economic policies to keep its debt levels in green, Finance minister has said.Amb. Claver Gatete told a media briefing at the Ministry of Finance and Economic Planning yesterday that the country has a “responsible” government that cannot afford to spoil investors’ confidence by failing to pay back the money obtained through the recent successful issue of its first sovereign bond.The money will instead be well invested in the projects for which it was solicited that have been deemed profitable and sustainable to the economy. More borrowing can only happen if more profitable projects are identified, the Finance minister said.“We have to be selective on what kind of loans we acquire and how much,” Amb. Gatete added.When Rwanda issued its debut Eurobond of $400 million at the Irish Stock Exchange last week, it was oversubscribed at more than $3.5 billion, more than half of the country’s $6.8 billion gross domestic product at the end of 2012.InvestorsInvestors were attracted by Rwanda’s strongly growing economy at 8.2 per cent from 2006 to 2012 and the IMF’s projected 7.6 per cent growth this year, low debt levels at 23.3 per cent of gross domestic product in 2012, and prevailing political stability.Inflation is also in single digits.Rwanda’s debt, which has to be paid back by 2023, carries a coupon of 6.625 per cent, which is the annual interest the government will be paying for the $400m (about Rwf250b) acquired by issuing the bond.While some analysts were wondering if it wouldn’t be smart for Rwanda to use the recently discovered confidence of investors in its economy and borrow more money that it needs to finance its infrastructure projects, the government will apparently not rush to take more loans.“We can’t afford to borrow up to a dangerous level,” Gatete said, highlighting that his is a “responsible” government. “No one has money to give out free of charge.”The government will use proceeds from the bond to fund the expansion plans for the national carrier RwandaAir, complete the Kigali Conventional Centre to exploit tourism opportunities in the country, and finance a 28 megawatt hydro power project on River Nyabarongo.The projects are expected to help accelerate the country’s economic development as it strives to become a middle-income economy by the year 2018, the Rwandan government says.

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Eurobond: Gatete says fund is for investment