Rwanda plans $1bn bond on investor demand

Rwanda plans to sell its second international bond of as much as $1 billion next year to fund the construction of an airport and power plants, seeking to tap burgeoning investor demand, President Paul Kagame said. The East African nation wants to build on the success of the $400m bond issued in April 2013 that was more than eight times oversubscribed, Kagame said in an interview at the US-Africa Leaders Summit in Washington yesterday, Bloomberg reports. At that foreign-debt sale, the government declined investors’ suggestions to increase the size of the offer, he said. “We might go for double that or more, up to $1bn,” Kagame said. Rwanda is one of Africa’s fastest growing economies, with growth averaging seven per cent over the past five years. The economy is forecast to expand 7.5 per cent this year and next, according to estimates from the International Monetary Fund. Kagame, who has been in power since 2000, has implemented policies that have helped rebuild the economy after a genocide in 1994 that left at least 800,000 people dead. “People who want to see Africa develop come to Rwanda particularly because we have set up a very good environment that makes things work for us and for our partners who come invest with us,” Kagame said. Yields on Rwanda’s Eurobond, due May 2023, have dropped 142 basis points, or about 1.4 percentage point, this year to 6.06 per cent as of 9 a.m. in London. Falling borrowing costs have prompted African nations from Kenya to Senegal to tap global bond markets, with sub-Saharan African nations selling $6.39bn in debt this year, compared with $9.7bn in all of 2013, according to Standard Bank Group Ltd., the continent’s biggest lender. Kagame said investor appetite for Rwandan bonds was a vindication of his policies and show investors are undeterred by criticism from human-rights advocates that the government is stifling political freedoms. Groups including Human Rights Watch and Amnesty International have accused Kagame’s administration of carrying out abuses such as illegal detentions and cracking down on dissent. The government has denied the claims. “The markets are never wrong,” Kagame said. “Look at the situation in Rwanda, where we have been 20 years ago and where we are now. It’s short of miraculous. It can’t be just because we are violating human rights. It’s because actually we value and respect human rights.” The infrastructure projects that Rwanda plans to fund include an upgrade to the country’s main international airport outside the capital, Kigali, and the construction of a 150-megawatt geothermal plant, he said. Funding is also required for a methane-fired power plant project that involves extracting the gas from underneath Lake Kivu that will produce as much as 100 megawatts of power, he said