Rwanda’s US$400m bond oversubscribed

Rwanda’s debut Eurobond of US$400 million was finally issued yesterday on the Irish Stock Exchange with an issuance coupon rate at 6.625 percent after two days of collecting orders.According to the Ministry of Finance, the bond’s issuance coupon rate was “highly over-subscribed” which is a “great result” that indicates Rwanda’s economic maturity and its attractiveness to investors on the international bond market.The oversubscribed order book developed momentum over the course of Wednesday and closed at over US$3.5 billion with 250 investors participating, the Minister of Finance, Claver Gatete said in a statement yesterday.“The bond, which was oversubscribed, signals that international investors have confidence in Africa beyond the usual commodity growth story,” Gatete said.“Rwanda’s intentions are to invest in infrastructure as part of building a modern, dynamic, service-based economy that is connected to international markets and that allows for rapid development.”Having laid the foundations for prosperity, the bond is a bold step on the path of economic maturity, according to Gatete.Due to mature in May 2023, the bond is under the management of international banks, BNP Paribas and Citigroup, which are mandated to ensure its strong legal documentation in line with international bond market standards, as well as to market Rwanda’s story to bond investors across their distribution network.Marketing the bonds was done in the format of physical road shows, where a delegation from the government visited investors across the world and made presentations.They were distributed to investors in the US, Europe and Asia after Rwandan officials met key emerging market fixed income investors in Boston, Frankfurt, Hong Kong, London, Los Angeles, Munich, New York and Singapore.“Bond investors must be convinced of the creditworthiness of Rwanda in comparison with other African sovereign nations. The timing of the deal also comes amid strong competing supply in the international bond market,” Nick Darrant, a banker at BNP Paribas told The New Times yesterday.The plan was approved by the International Monetary Fund (IMF).Through the Eurobond, government expects to raise funds to service its external debt, as well as source financing for major projects such as the completion of Kigali Conventional Centre and RwandaAir expansion programme.The Financial Times reported that although Rwanda’s bond is less than the required minimum benchmark of US$500 million, investors were undeterred and indicated huge interest due to the country’s steady economic growth.Growing economy“When the bond is in the bond index then the demand is greater, but if the bond is not in the index (such as Rwanda’s bond) then it means that investors are buying the bond for the sole reason that they believe in the story of Rwanda. This is surely a good thing,” Darrant added.Although the country faced simultaneous aid cuts last year, its economy managed to grow by eight per cent. Other countries that have sold debut bonds recently include Zambia, Paraguay, Angola, Honduras, Montenegro and Bolivia.Fitch Ratings, one of the most respected rating agencies in the world, rated Rwanda’s long-term foreign and local currency Issuer Default Rating (IDR) at ‘B’, underlining the country’s credit worthiness and debt repayment ability.The government’s strategy is that by 2018, economic growth will have averaged 11.5 per cent per annum and export growth 28 per cent.

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Rwanda’s US$400m bond oversubscribed