The first ever 20-year Treasury Bond worth Rwf15billion has yielded a remarkable subscription level of 141.03% from 80 applications received from different categories of investors, Rwanda Central Bank (BNR) has said.
Government through the central bank has since 2014, usually been issuing bonds with a lifespan of between ten to fifteen years.
This month’s 20-year Treasury bond was re-issued with its bid coupons on the offer from August 21- 23rd, 2019 and a book building process was used to price the bond final price at 13.250%
Book building involves a process of generating, capturing, and recording investor demand for shares.
According to BNR the investor demand for shares has been impressive reflecting confidence in growth of the local capital market and the money will largely be injected in infrastructure development projects.
In the process of investors grabbing this August bond opportunities showed some slight increase in bank appetite, a drop in individual and retailers appetite and institutional investor, though in general the latter retained a lead.
For example in this August bond, Institutional investors got an allotment of 47.39%, followed by banks getting a 37.64% allocation while individuals and retailers managed to secure 14.9% of the total issued amount.
In comparison to the January Treasury bond (15-year worth 10 billion) institutional investors retained a higher appetite with 48.4%, while banks were allocated 30.0%. Individuals and retailers were allocated 21.6% of the total issued amount.
“The successful issuance is attributable to favorable macro-economic conditions and coordinated efforts in public awareness campaign across the country in a bid to sensitize Rwandans to invest in risk free government securities,” Central Bank Governor, John Rwangombwa said in statement.
This bond will pay coupons semi-annually and will be listed on the Rwanda Stock Exchange (RSE) bourse on Tuesday, September 23, 2019, to pave way for secondary purchase of the bonds through brokerage deals.
In a related development, Rwanda Central Bank also revealed that the next bond issuance for this financial year will be a reopen 5-year bond on September 25th 2019.
So far 21 bonds in total have been rolled out to the public since 2014 when government took a firm commitment to issue bonds on a quarterly basis with various maturities ranging between five, seven, ten and 15 years.
To boost this process, Central Bank, Capital Markets Authority (CMA) Rwanda and the Ministries of Finance and Local Government are pondering on extending bond issuance to districts, to scale up their long term sources of revenues for local government organs.
Permanent Secretary of Ministry of Finance, Caleb Rwamuganza said earlier that in order for this to happen, districts will need to clean up their finance standings and endeavor on clean audit reports.