Rwanda to Seek Second Credit Rating as It Prepares to Sell First Eurobond

Rwanda, which was named by the World Bank in 2009 as the world’s “top reformer” for making the most business-friendly changes to its regulations, will seek a second credit rating this year as it prepares to sell its first global bond, Finance Minister John Rwangombwa said.

The government is in talks with Standard & Poor’s on a sovereign rating this year and “we expect to be really ready for the market in the next two to three years,” Rwangombwa said in an interview in Cape Town yesterday.

The East African nation, which makes most of its foreign currency from tourism and the export of coffee, doubled the size of its economy in the nine years to 2010, according to the World Bank, as it recovers from a genocide that killed 800,000 mainly ethnic Tutsis in 1994. With government debt of just 12 percent of gross domestic product, Rwanda is now seeking to tap international markets to finance spending on power projects and roads to help boost the economy’s potential.

“We have investment banks that are willing to go to the market right now,” Rwangombwa said in the interview at the World Economic Forum on Africa. “But we are putting our house in order to ensure that we are getting the right cost of our financing. There is appetite outside there.”

African Eurobonds

Rwanda joins African countries such as Nigeria and Zambia that are turning to global capital markets to fund infrastructure projects. Rwanda has a sovereign credit rating of B by Fitch Ratings, lower than Zambia’s B+ and in the same category as Uganda, Mozambique and Seychelles.

The yield on Nigeria’s $500 million Eurobond was 6.16 percent today, unchanged from yesterday. Ghana’s dollar- denominated notes due in 2017 rose, reducing the yield by three basis points, or 0.03 percentage point, to 6.06 percent.

The African Development Bank is investigating helping Rwanda sell a “diaspora” bond that will be marketed to Rwandans living abroad, the lender’s chief economist and vice president, Mthuli Ncube, said in Cape Town yesterday.

The World Bank has praised economic progress in Rwanda, where it takes just three days to register a company, compared with an average of 45 days in sub-Saharan Africa and 13.8 days in Organization for Economic Cooperation and Development countries, according to the lender.

Renaissance Capital said in a report on April 12 that Rwanda is succeeding in reaching its goal of becoming a “Singapore of Africa” due to political stability, low corruption and a shift to a service economy.

Investor Demand

Investor demand in the recent sale of the state’s 25 percent stake in brewer Brassieries et Lemonaderies du Rwanda SA, a unit of Heineken NV, indicates appetite for Rwandan assets, Rwangombwa said. The government plans to hold an initial public offering for Bank of Rwanda this year and “already the indications are that appetite is very high in the market,” he said.

Rwangombwa has lowered his target for economic growth this year to 7 percent from 8 percent as rising food and energy costs push up inflation and boost import costs. The government may consider reducing fuel taxes to ease costs if its outlook for inflation worsens, he said. Inflation accelerated to 4.1 percent in March from 2.3 percent the month before, the statistics office said on April 15.

The finance minister presented a budget of 1.12 trillion francs ($1.86 billion) to parliament on May 2 for the fiscal year ending June 2012, with revenue expected to jump 14 percent to 538 million francs. The budget deficit is forecast to narrow to 1.5 percent of gross domestic product next year from 4.1 percent in the year through June. International donors fund about 41 percent of state spending, Rwangombwa said.

Stronger tax revenue is mainly due to increased spending as the economy expands, the minister said.

“People have more money and there’ll be more revenues,” Rwangombwa said. “Also there’s an increase in the efficiency of revenue collection.”

To contact the reporters on this story: Nasreen Seria in Cape Town via at

To contact the editor responsible for this story: Andrew J. Barden at

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