For the first time in its history, the Development Bank of Rwanda (BRD) has entered the stock market by introducing its Rwf30 billion Sustainability-Linked Bond, on Friday, October 27.
This seven-year maturity bond, which was initially announced on September 29, has been listed and will be traded on the Rwanda Stock Exchange (RSE) at a coupon rate of 12.85 percent in the local currency.
The bond garnered substantial investor interest, surpassing expectations, as it was oversubscribed by 110.5 percent, reaching Rwf33.1 billion, well beyond the initial target of Rwf30 billion.
Listing on the RSE opens the door for trading the bond on the secondary market, allowing initial bond buyers to trade their investment portions with other interested parties.
The funds generated from the Sustainability-Linked Bond will primarily finance various projects, including support for small and medium-sized businesses, affordable housing initiatives, and an effort to increase the representation of women-led businesses from the current 15.4 percent to 30 percent, according to BRD.
This marks the initial issuance under a broader $124 million (Rwf150 billion) Medium Term Note Programme, a five-year initiative carried out in collaboration with the World Bank, which provides a Rwf10 billion guarantee for investments made by entities subscribing to the bond.
Kampeta Pichette Sayinzoga, CEO of BRD, emphasized that the strong performance of the bank over the years, coupled with the World Bank’s guarantee, contributed to the public’s interest and confidence in the bond. She noted that Rwandans are eager to engage in initiatives that aim for the common good.
“For the first time in 56 years, we are able to put ourselves out there. When the market buys the bond, it means they are buying into the company, which holds great significance to our work. It gives us more flexibility to mobilize resources for project financing.”
Sayinzoga expressed the bank’s intention to issue more bonds in the near future, with the aim of attracting more individual subscribers alongside institutions.
Out of the 129 subscribers to the Sustainability-Linked Bond, 100 were individual investors, accounting for 77.5 percent of all subscribers and contributing Rwf1.1 billion to the total amount. The remaining percentage is divided among commercial banks, pension companies, corporate firms, and savings cooperatives.
Pierre-Célestin Rwabukumba, CEO of RSE, celebrated this as a significant milestone for the local stock market and the wider region, with BRD leading the way in sustainability financing, which plays a crucial role in the country’s development.
While stock markets in the region have faced economic challenges, Rwabukumba highlighted RSE’s resilience, showing strong performance in various indices.
Looking ahead, he revealed that there are three transactions in the pipeline expected to be listed before the end of 2023.
The Sustainability-Linked Bond benefits from partial credit enhancement through a World Bank lending operation to the Government of Rwanda under the Access to Finance for Economic Recovery and Resilience Project (AFIRR), a five-year project with three pillars, including liquidity and recovery facility, risk-sharing facility, and institutional strengthening and implementation support.
Sahr Kpundeh, World Bank Country Manager, underscored the significance of this bond structure in galvanizing private sector investment to address the impact of climate change on economies. He noted that this approach could be scaled up and replicated in other countries, amplifying the World Bank’s capacity in concessional financing.
Richard Tusabe, State Minister in charge of National Treasury in the Ministry of Finance and Economic Planning, commended the bank for issuing this groundbreaking bond, demonstrating a commitment to sustainable development and offering investors an opportunity to support projects with a positive impact on the environment and society.
