To contribute to Rwanda’s debt sustainability strategy, the country has raised $620 million through a 10-year Eurobond, part of which will go towards retiring an outstanding dollar bond.
The East African nation, like some other global economies, has experienced public debt increase in the wake of the coronavirus crisis, which hit revenues and forced the government to borrow more.
Earlier in May, the finance ministry said total debt climbed by 13% last year, driving the overall level to 71% of GDP, which is expected to jump to 79.7% at the end of 2021.
Still, investors piled into the latest issue, offering $1.6 billion in total. The eventual interest rate for the bond was 5.5%, the ministry said.
According to Rwanda Central Bank governor, John Rwangombwa, “The lower yield of this issue will result in a reduction in our annual interest payments over the next 10 years, strongly contributing to our debt sustainability strategy.”
Bond proceeds will be used to pay off creditors of the existing Eurobond when it matures in May 2023, while the rest will fund economic recovery programs.
The government predicts that the economy will grow by 5.1% this year, after contracting by 3.4% last year, as the COVID-19 pandemic starts to ease.