BRD Launches Sustainability Linked Bond

Publiched on 22/11/2023

For the first time, the Development Bank of Rwanda (BRD) entered the stock market by listing its Rwf30 billion Sustainability-Linked Bond on Friday, October 27. The seven-year maturity bond, announced on September 29, will be listed and traded on the Rwanda Stock Exchange (RSE) at a coupon rate of 12.85 per cent in the local currency. The bond, received with great interest from investors, was oversubscribed by 110.5 percent, surpassing the initial target amount of Rwf30 billion to Rwf33.1 billion.

The listing on RSE initiates the bond on the secondary market, allowing subscribers or initial buyers of the bond to trade their investment portions with other interested parties. The proceeds from the Sustainability-Linked Bond (SLB) will be used, in large part, to finance projects such as small and medium-sized businesses, affordable housing, and the goal to increase women-led businesses from the current 15.4 percent to 30 percent, according to the bank.

This marks the initial issuance of a larger $124 million (Rwf150 billion) Medium-Term Note Programme, a five-year project in collaboration with the World Bank, providing a Rwf10 billion guarantee for investments of entities that subscribed to the bond. Kampeta Pichette Sayinzoga, CEO of BRD, highlighted that, besides factors such as the bank’s strong performance and the World Bank’s guarantee, the bond attracted public interest and confidence because Rwandans want to be involved in initiatives for the collective 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,” noted Sayinzoga. The bank looks forward to issuing more bonds in the near future, hoping to attract more individual subscribers in addition to institutions.

Out of 129 subscribers to the SLB, 100 were individual investors, representing 77.5 percent of all subscribers, contributing Rwf1.1 billion to the total amount, according to BRD. The remaining percentage is shared among commercial banks, pension companies, corporate companies, and savings cooperatives. Pierre-Célestin Rwabukumba, CEO of RSE, stated that this is a significant milestone for the local stock market and beyond, with BRD championing sustainability financing, playing a crucial role in the country’s development.

While stock markets in the region have faced economic challenges, RSE has remained resilient, recording strong performance in different indices. Rwabukumba mentioned that, going forward, three transactions are in the pipeline, expected to be listed before the end of 2023.

The SLB is partially credit-enhanced through a World Bank lending operation to the Government of Rwanda through the Access to Finance for Economic Recovery and Resilience Project (AFIRR) – a five-year project running on three pillars, including liquidity and recovery facility, risk-sharing facility, and institutional strengthening and implementation support. Sahr Kpundeh, World Bank Country Manager, highlighted that this bond structure, scalable and replicable in other countries, enables the World Bank to stretch every dollar and boost its capacity in concessional financing.

Richard Tusabe, State Minister in charge of National Treasury at the Ministry of Finance and Economic Planning, commended the bank for issuing this bond, emphasizing its role in achieving Sustainable Development Goals. “This bond is a groundbreaking initiative that not only demonstrates our commitment to sustainable development but also provides an opportunity for investors to support projects that have a positive impact on the environment and society,” he added.