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Rwanda Central Bank Reveals Top Consumers of its Treasury Bonds

by Dan Ngabonziza
3:09 pm

Entrance to the Kigali Convention Centre. This facility is among the infrastructure which necessitated treasury bond

“Central Bank Rwanda on behalf of Rwanda Government is set to issue a Treasury Bond worth Frw 15 billion to develop Rwanda’s capital market industry and fund infrastructure projects. The market will be open from Monday 19 to Wednesday 21 August 2019,” a message from Rwanda’s Central Bank reads.

Since 2014, the Bank has been issuing treasury bonds worth billions to support the country’s projects.

However, questions remain on who have been top subscribers of the bonds issued on Rwanda Stock Exchange, which, observers say, is still young and yet to attract more investors.

KT Press reached out to Central Bank to know exactly how the treasury bonds have been subscribed.

In an email sent to KT Press, Central Bank says that since 2014, twenty-one new bonds have been issued and listed on the Rwanda Stock Exchange which, it says, has yielded good subscription level.

“From 2014 up to June 2019, the average subscription is 197.1%,” the Bank said in an email sent to KT Press.

According to the bank, institutional investors dominate the subscription rate compared to individual investors.

“The most dominant buyers are institutional investors whereby they hold a share of 53.6% of the total outstanding as end of June 2019 compared to banks (36.0%) and retailers (10.4%),” Central Bank told KT Press.

The Bank says that government has been using Treasury bonds and bills to borrow on domestic market as an alternative from borrowing externally which implies repayment in a foreign currency and interests paid to foreign economies.

“In fact, domestic borrowing through bonds is one of the ways to achieve the self-reliance and dignity to contribute to the development of Government large-scale projects like roads, energy, health infrastructures, etc. but also to provide investment opportunity to Rwandans,” the Bank told KT Press.

In addition, especially on the incoming Rwf15 billion bond, the bank says it is doing it in the interest of boosting the country’s capital market.

“The capital market is an avenue for borrowers to raise long term resources at a relatively cheaper cost and an alternative for a safe and long term investment to the savers. Therefore, by issuing on regular basis the T-Bonds, BNR sets benchmarks (maturities and yields) for both investors and borrowers,” says the Bank.

In addition, it adds, “T-Bonds are listed on RSE and this avails more products and business for trading on secondary market. Moreover, BNR did five reopening for increasing liquidity and price discovery.”

Asked if there are specific projects the T-bonds have funded so far, Central Bank said all has been done in the interests of supplementing budget deficits.

“There is no specific project that was financed with bond proceeds. In fact, bond proceeds help to supplement government budget deficit and to promote the development of capital market,” the Bank told KT Press.

According to Central Bank, when a bond is issued, proceeds go to the government account and it is used with other government revenues to finance infrastructures projects included in the budget such as roads, hospitals, schools, new Rwandair airplanes, electricity generation projects, water and others.