Rwanda sets initial price guidance on USD 400mn debut Eurobond at low 7% – report

By bne IntelliNews April 24, 2013

Rwanda has set initial price guidance of low 7% on its upcoming USD 400mn 10-year debut Eurobond issue, Reuters reported, quoting market sources. The sovereign has started taking indications of interest from investors on Wednesday morning (April 24) with European and U.S. order books slated to go subject at close of business, New York time, the agency said. Official price guidance on the issue is expected to be released on Thursday (April 25). Lead managers of the issue are BNP Paribas and Citigroup.

Rwanda is rated at B by Fitch and S&P. It will be the first East African country to issue a Eurobond. East Africa’s biggest economy, Kenya plans USD 1bn debut sovereign Eurobond in the second half of 2013, following the largely peaceful elections in March.

The latest sub-Saharan Africa Eurobond issue was in September 2012, when Zambia, rated B+ by Fitch and S&P, sold a debut USD 750mn 10-year Eurobond at a yield of 5.6% amid huge investor interest. In addition to Kenya, other sub-Saharan Africa countries that have announced intentions to issue Eurobonds this year include Ghana, Nigeria, and Tanzania.

The International Monetary Fund (IMF) has supported Rwanda’s Eurobond plan, saying there is a big appetite for that kind of risk among international investors.

Rwanda intends to spend USD 120mn of the proceeds on repaying an outstanding loan on the Kigali Conventional Centre. It will spend USD 80mn to repay another outstanding loan that was granted to fund the expansion of national carrier RwandaAir. Some USD 150mn will go for the completion of the Kigali Convention Centre and the balance of USD 50mn is earmarked for the completion of the long-awaited Nyabarongo hydropower project.

Rwanda initially planned to issue the Eurobond at the end of 2012, but it was put off due to negative publicity after several European donor countries suspended or delayed their aid to the country over allegations Rwanda was supporting rebels in the neighbouring Democratic Republic of Congo (DRC), which Kigali has rejected.

Rwanda's economy grew 7.7% in 2012, down from 8.6% in 2011, and economic growth is expected to slow to 7.1% this year due to the reduced donor support.

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