Government re-opens 20-year bond to raise Rwf15b

According to the central bank, the government is back on the market seeking to raise Rwf15b through a 20-year Treasury bond to fund infrastructure projects.

Bids for the bond, which will be determined by book building, will be received from August 21 (next week Wednesday) to August 23.

Book building involves a process of generating, capturing and recording share demand from investors.

Applications are accepted in the process largely from large buyers such as financial institutions, corporations are determined with the price at which new shares are issued after the book is closed.

Interest payments for the bonds will be paid out from February next year until July 2039 semi-annually.

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The Treasury bond sale is under the quarterly issuance program of the government that began to raise cash to finance infrastructure projects in 2014. The program is also aimed at developing the local capital market.

Interest will be subject to withholding tax at a rate of 5% for inhabitants of EAC and 15% for inhabitants of non-EAC.

Therefore, all investors must finish the bond application form accessible on the website of the National Bank of Rwanda.

The Treasury bonds were oversubscribed in past years reflecting trust in the local economy.

International financial services business, Standard & Poor’s upgraded Rwanda’s loan score from a flat “B” to “B+” earlier this week, thereby boosting investor trust in the nation.

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A sovereign rating of credit is an autonomous evaluation of the creditworthiness of a country. It is essential because it provides investors with insight into the level of danger associated with investing in a country’s debt, including any political risk.

According to the recent worldwide market intelligence insights from S&P, despite the scheduled fiscal development, the company expects debt rates from the government to stay moderate and comparatively low debt service costs.

 

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