BRD (Development Bank of Rwanda), a leading financial institution in Rwanda with over 56 years’ experience, recently issued a Sustainability Linked bond that has witnessed overwhelming demand, resulting in oversubscription. Investors are flocking to invest in the bond due to multiple compelling factors, according to Ms. Kampeta Pitchette Sayinzoga, BRD’s CEO. The robust performance of BRD, coupled with the cash collateral received from the government and the World Bank, has instilled confidence in the market, making the bond an attractive investment option.
Ms. Kampeta told TOP AFRICA NEWS that there are about three primary factors contributing to the over-subscription of the recently issued Sustainability Linked bond.
Firstly, the strong performance of BRD over the past years has significantly influenced investors sentiment.
Ms. Kampeta Pitchette Sayinzoga, BRD’s CEO
The company’s financials showcase consistent growth, profitability, and strong fundamentals, assuring investors that their investments will be repaid. This track record has bolstered market confidence, making the bond an appealing choice for investors seeking stability and reliability.
Furthermore, the availability of cash collateral from the government and the World Bank has had a significant impact on investor sentiment. This innovative approach, relatively new to the markets, showcases BRD’s ability to attract support from prestigious institutions. The involvement of these powerful entities further solidifies the credibility and trustworthiness of BRD’s bond offering.
According to Ms. Kampeta “The bond’s oversubscription reflects the market’s growing trust and confidence in BRD as a new player in the industry.”
Despite being a relatively recent entrant, the financial institution has demonstrated its ability to secure support from established and influential institutions. This support not only enhances BRD’s reputation but also ensures investors that their investments are backed by strong entities.
Ms. Kampeta Pitchette Sayinzoga, BRD’s CEO said:“I strongly believe that Rwandan investors, and investors that invest in Rwanda, like to do good. So if you tell them that you’re going to take their money, and with their money, you are going to do good for the broader community, they respond well to this. We’ve seen it with Community Health Insurance. We’ve seen it with #CanaChallenge, when we’re doing the solar-paneled crowdfunding. We’ve seen it with many interventions of government that when you call on Rwandan institutions to support the development of the country, they generally have a lot of goodwill.”
Additionally, the pricing of the bond has been a significant draw for investors. With a generous pricing of 12.85%, those who have invested in the bond can expect a good financial reward. The attractive duration of seven years has also played a role in capturing the interest of the market. It strikes a balance between being long-term enough to provide stability and short-term enough to offer liquidity.
Moreover, Ms. Kampeta added that “the bond’s certification by Standard, confirming its compliance with Environmental, Social, and Governance (ESG) standards, has been appealing to institutional investors.”
Pierre Celestin RWABUKUMBA, Chief Executive Officer of the Rwanda Stock Exchange Ltd.
This certification gives banks and other financial institutions the opportunity to showcase their commitment to ESG principles, which is increasingly important in today’s corporate landscape.
The CEO also emphasized the significance of the bond for BRD as a bank. Being the first bond ever issued by the bank, it represents a milestone moment in its history. It signifies that BRD is capable of putting itself on the market and attracting investors.
She said that “By investing in the bond, the market is not only showing faith in the bank but also validating its performance and hard work.”
“And the market believes that it’s worth being what it is. So for us, it’s of huge significance. And if you know at BRD we can’t take deposits. So that’s why don’t have Guichets, what we do is we take money from creditors, typically outside the country, and then we pass that money on to all projects in Rwanda. So that has been our business model for 56 years.” She said.
“This is the first time we’re saying, wait, can we maybe ask investors to invest in us and then we use that money now to do project finance. So it gives us more flexibility in terms of the resource mobilization strategy of the bank. So that’s why it’s a very big deal for us.” Ms. Kampeta added,
The impacts of the bond’s oversubscription on the Country’s Economy
According to Ms. Kampeta, “The impact on the government of Rwanda agenda is going to be significant, not only because of the three performance indicators, but also because we are pioneering this Sustainability Link bond.”
“We hope that tomorrow we will see other institutions doing the same. We hope that maybe some banks will be inspired to do it. Maybe government will be inspired to do it when the Sustainability Link bond issuance locally or internationally.” She added.
“So the more we’re able to issue bonds, the more we’re able to push money into the economy, and the better it is for everybody. So this innovation is also good because we hope that everybody will continue to thrive. We’re not trying to keep it to ourselves. We want to make sure that others will do the same, and then we all benefit, and then we have more products on the stock exchange that we can all participate in.” she said
“We have talked about the access to the capital markets, and we definitely want to come back, and whatever issuance we will do, we will do our best to ensure that this is an issuance that is listed on the Rwanda Stock Exchange so that we can also participate in the capital market development of our country.”