Rwanda's $18M locally-listed bond to have a 3-year maturity
18 February 2014, 12:10
Kigali - Rwanda's 12.5-billion-franc bond - listed in Kigali and on sale this month - will have a three-year maturity and non-east African investors will pay 15 percent withholding tax, the ministry of finance said on Monday.
Rwanda has one of the fastest growth rates in the east Africa and lowest debt levels. In a bid to cut dependence on donors, it issued a $400 million Eurobond last year, meeting massive demand. Its bond market is however small and inactive.
The International Monetary Fund expects economic growth in the landlocked nation of 7.5 percent in 2014.
Subscription levels for Rwandan debt in the past have averaged 197 percent with yields of 8 percent to 11.5 percent, the ministry of finance said.
The bond will be on sale till February 27 with minimum bids of 50 million Rwanda francs for competitive bids and 100,000 francs for non-competitive bids, the ministry said.
Officials said they will be targeting investors from beyond its borders, marking a shift from past issues. Investors from the five-nation East African Community (EAC) will pay a lower withholding tax rate of 5 percent.
"For the first time we are targeting investors from the region, beyond Rwanda," John Rwangombwa, governor of the central bank, said last week.
"We are going to do more awareness campaigning to the population because we expect many people to invest in this bond and we expect it to be trading on the secondary market."
Funds raised through the bond will be used in infrastructure projects and investments in the development of the capital markets, the ministry of finance said.