The Government’s issuance of Rwf 15 billion Treasury bond has been successful with Rwf 34.8 billion as the total amount booked representing a subscription level of 232 percent, the highest ever oversubscription recorded by any government bond.
The National Bank of Rwanda received 91 bids from different categories of investors compared to 56 in the previous issuance. Retail investors increased to 39 from 29 recorded in February this year.
Foreign investors from Canada, France, Belgium, Mauritius, Kenya and Tanzania also expressed interest in the Rwandan Bond Market subscribing 6.1% of total bids.
Amb. Claver Gatete, The Minister of Finance and Economic Planning told journalists in Kigali that the success of the Treasury bond indicates investors’ confidence in the macroeconomic frame work and the Country’s economic direction.
“To have this bond subscribed by 232% with a wide participation is a clear indication of how investors perceive our economy. Our aim is to ensure that we keep this trend by continuing our prudent macroeconomic policies,” Gatete said.
The Central Bank employed book-building method to determine the price of the bond. The initial guidance price was announced at upper 11s which was later revised to 11.875% to 12% range. The final price was 12% with a coupon rate of 11.875%.
The success of this issuance is attributed to the far-reaching public awareness campaigns that were conducted by teams from The Central Bank, Ministry of Finance and Economic Planning, Capital Market Authority and the Rwanda Stock Exchange across the country.
The result shows improved awareness of the population and increasing domestic investors’ appetite in the bond market.
The bond issuance is in line with the renewed government commitment to revive the bond market and to promote the culture of long term savings through securities market.
The Treasury bond is the third in a series of local treasury bonds issued by government in a bid to promote capital market growth and fund infrastructure related projects. Next issuance is scheduled for November 2014.
“Rwandans have begun to understand that there are alternative ways of wealth creation by saving long term through government securities. We are looking forward to increased secondary market participation,” Governor Rwangombwa said.
The bond is set to be traded on the secondary market at the Rwanda Stock Exchange by September 2, 2014.