BK Capital's Kisoso on Rwanda's Rwf30bn sustainability-linked bond

Rwanda is making waves in the financial markets with the groundbreaking launch of its inaugural sustainability-linked bond valued at Rwf30 billion. The Development Bank of Rwanda (BRD) kicked off the offer for this seven-year bond with a competitive coupon rate of 12.85% and is set to close on October 13. The bond will soon be listed on the Rwanda Stock Exchange, marking a significant milestone for the country's financial sector. BK Capital, as the transaction advisor, played a pivotal role in facilitating this innovative bond issuance. Siongo Kisoso, the Managing Director of BK Capital, emphasized the importance of sustainable development and inclusivity in allocating funds for growth. The sustainability-linked nature of this bond enables BRD to achieve tighter pricing, reflecting the current trend of increasing investor appetite for sustainability-themed investments. Kisoso highlighted how this issuance positions Rwanda on the global financial map as the first by a national development bank and a collaboration with the World Bank. Furthermore, investors are presented with a valuable opportunity to diversify their portfolios by investing in the high credit-rated issuer. With BRD's credit rating similar to the government of Rwanda, investors are assured of a low-risk entry into the IRC corporate bond market, enhancing their access to Environmental, Social, and Governance (ESG) investments. The sustainability-linked bond sets a precedent for future issuances, fostering market vibrancy and liquidity on the Rwanda Stock Exchange. In an exclusive interview with CNBC Africa, Siongo Kisoso shed light on the key considerations and challenges faced during the bond issuance process. He highlighted the speed at which BRD completed the issuance as a testament to the feasibility of large-scale bond offerings in the market. This Rwf30 billion issuance marks a significant milestone as the largest corporate bond issuance ever on the Rwanda Stock Exchange, promising to attract a broader investor base and invigorate the market. Kisoso addressed investor concerns regarding the credibility of Key Performance Indicators (KPIs) associated with sustainability-linked bonds. He reassured investors by emphasizing the alignment of the bond framework with international sustainability standards and independent assessment by recognized rating agencies. As more issuers embrace sustainable financing, the market is poised to witness a positive shift towards impactful investments. When considering the timing of the bond issuance amidst global economic challenges, Kisoso expressed confidence in the current market conditions. Despite rising interest rates and inflation concerns globally, the local currency issuance provides BRD with a hedge against currency devaluation and fluctuating hard currency funding costs. The favorable trend of declining interest rates in the local money markets further enhances the attractiveness of the bond offering. As Rwanda paves the way for sustainable financing and economic development through innovative bond issuances, investors and market participants are poised to benefit from diversified investment opportunities, enhanced market liquidity, and impactful financing channels. The launch of the Rwf30 billion sustainability-linked bond signifies Rwanda's commitment to sustainable growth, financial inclusion, and market resilience in the face of global economic challenges.