Local investors snapped up the Rwf15 billion Treasury bond issued by the government this week; in a show of growing awareness among Rwandans about investing in government debt and rising confidence in the country’s financial market.
Although the seven-year bond issued through the National Bank of Rwanda (BNR) was open to foreign investors as well, individual Rwandans, small credit and savings cooperatives and Rwanda-based banks and insurance companies across the country gobbled up the entire bond, leaving it oversubscribed at 187 per cent.
The band has a coupon (interest rate) of 12.5 per cent paid twice a year.
The Ministry of Finance and Economic Planning (Minecofin), in a statement issued on Wednesday, attributed the successful issuance of the bond to the growing awareness about investing in the government’s debt and trading on the Rwanda Stock Exchange.
“The success of the bond market in Rwanda is attributed to a vigorous awareness campaign to encourage the public to explore alternative ways of saving and investment. As a result, this bond has attracted domestic retail investors’ appetite where Savings and Credit Cooperatives (Sacco’s) have discovered an alternative and safer way of investing their members’ money,” Minecofin said.
Sacco’s participation in the bond market increased significantly from three applications in the Treasury bond issued in August 2014 to 10 applications in the bond issued this week.
BNR’s Director of Financial Markets, Chantal Kasangwa, said she was amazed by the rate of participation of Saccos.
She attributed it to campaigns aimed at sensitising Rwandans to trade on the Rwanda Stock Exchange (RSE) and invest in different government bonds.
“It’s a step made in mobilising people on the opportunities in the bonds. Now Saccos have a risk-free investment and can use it as collateral to acquire loans,” Kasangwa said.
In this week’s Treasury bond, retailers and individual investors accounted for 1.4 per cent, banks got 45.6 per cent, while non-financial institutional investors were allocated 53 per cent of the total amount offered.
Among the biggest investors in the bond is a commercial bank, Cogebanque, whose Chief Finance Officer, Rashid Muremangingo, beamed with pleasure for the investment the bank had made when he talked to Saturday Times onThursday.
“Our aim is to fully participate in the development of our country,” Muremangingo said.
The Minister for Finance and Economic Planning, Claver Gatete, and the National Bank of Rwanda (BNR) Governor, John Rwangombwa, had said the Government was issuing the Rws15 billion bond this week to raise money for ongoing infrastructure projects as well as support the country’s young capital market.
The Treasury bond, which will be listed on the Rwanda Stock Exchange, on Tuesday, December 2, was also issued in line with the Government’s commitment to issue Treasury bonds on a regular basis.
Next issuances for the current financial year 2014-2015 will be on February 23, 2015 for a three-year maturity, and May 25, 2015 for a 10-year bond, Minecofin said in a statement on Wednesday.