Rwanda Investment Group (RIG) has temporarily suspended plans to borrow from the public on concerns that it might incur high borrowing costs due to high interest rates and low liquidity on the local market, management has said.
The consortium of some 43 local investors had planned to issue a corporate bond valued at around $40m (Rwf23.1b) to $50m (Rwf28.9b) to finance the construction of the new cement factory for its subsidiary, Cimerwa.
The management of RIG says that it has put the plans on hold as they wait for better market conditions.
“The market has high interest rates and as investors we should closely watch the trend, see the growth possibilities of having slightly low rates,” Fiacré Birasa, the Director General of RIG said in an exclusive interview.
The Central Bank recently lowered its key repo rate- the rate at which it lends to commercial banks by 0.5 percentage points from 7.5 percent to 7 percent to boost liquidity levels on the local market.
Birasa said the project of listing the $50m bond is bigger than local market capacity and that the company was considering partnerships from regional and international stakeholders.
“We are still holding because the market is not responding. RIG’s equity is $25m which is bigger than local banks’ liquidity.”
The Director General said that RIG will contribute 30 percent of the finances required to construct the $70m cement plant in Cyangugu. The balance will be raised from other equity investors and the public.
The new plant is expected to increase Cimerwa’s current cement output by six fold to 600,000 tonnes annually from 100,000 tonnes.