Paul Richardson and Hans Nichols Washington
RWANDA planned to sell its second international bond of as much as $1 billion (R10.7bn) next year to fund the construction of an airport and power plants, seeking to tap burgeoning investor demand, President Paul Kagame said this week.
The east African nation wanted to build on the success of the $400 million bond issued in April last year that was more than eight times oversubscribed, Kagame said at the US-Africa Leaders Summit in Washington on Tuesday.
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 7 percent over the past five years. The economy is forecast to expand 7.5 percent 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.”
Yields on Rwanda’s Eurobond, due May 2023, have dropped 142 basis points, or about 1.4 percentage point, this year to 6.06 percent as of 9am 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.
Kagame said investor appetite for Rwandan bonds was a vindication of his policies and showed investors were undeterred by criticism from human rights advocates that the government was 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’s because actually we value and respect human rights.”
The infrastructure projects that Rwanda planned 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, the president said, adding that funding was also required for a methane-fired power plant project that involved extracting the gas from underneath Lake Kivu to produce as much as 100MW of power.
President Barack Obama is hosting more than 40 African heads of state for the summit this week, aiming to spur US investment and trade with Africa.
“It’s a very significant step in the relationship between Africa and the US,” Kagame said. – Bloomberg