BK Capital arranges $10mn green bond for Prime Energy

Rwanda recently made history with the successful issuance of its first green bond valued at $10 million for Prime Energy PLC. The landmark issuance, arranged by BK Capital, marks a significant milestone for the country's sustainability finance sector. In an exclusive interview with Siongo Kisoso, Managing Director of BK Capital, CNBC Africa delved into the details of the green bond and its implications for Rwanda's renewable energy landscape. Prime Energy PLC, an independent power producer specializing in hydro power plants, is the issuer of the bond. With an installed capacity of 7.8 megawatts across four power plants in Rwanda, Prime Energy plays a crucial role in the country's energy sector. The green bond, with an offer amount of 9.5 billion franc, will finance the development of a new hydro plant, Rukarara 6, with an installed capacity of 9.8 megawatts. Additionally, a portion of the proceeds will support maintenance capex for Prime Energy's existing plants. The bond features two tranches - a fixed rate Rwanda franc tranche and a USD linked tranche, catering to both local and international investors. The innovative structure of the bond, with a seven-year tenor and amortizing nature, offers attractive returns to investors. The USD linked tranche, priced at 9.5 percent, is tailored for international investors seeking exposure to green bonds and infrastructure projects in frontier markets like Rwanda. On the other hand, the Rwanda franc tranche, with a coupon rate of 13.75 percent, has garnered significant interest from local institutional investors looking for stable returns and ESG asset exposure. Despite facing initial challenges that led to a temporary halt in March, the successful relaunch of the green bond underscores the resilience and commitment of all stakeholders involved. The completion of key agreements and payment of outstanding balances paved the way for the bond's successful offering to the public. The robust investor interest in the green bond reflects a growing appetite for sustainable investments in Rwanda. As Siongo Kisoso highlighted, the green bond aligns with international standards and demonstrates transparency in the use of proceeds, governance, and reporting. The bond's alignment with the International Capital Market Association green bond principles and Rwanda's green taxonomy further enhances its credibility and appeal to a wider investor base. Looking ahead, the issuance of Rwanda's first green bond sets a promising precedent for future sustainability finance initiatives in the country. With a burgeoning demand for infrastructure financing and renewable energy projects, green bonds could emerge as a viable solution to bridge the funding gap and promote sustainable development in Rwanda. As Siongo Kisoso aptly noted, the success of the green bond with Prime Energy PLC could catalyze further green bond issuances in Rwanda, offering a pathway for companies to raise capital for renewable energy and infrastructure projects. The collaboration between BK Capital and Prime Energy exemplifies the potential for innovative financial instruments to drive positive change and support Rwanda's transition towards a greener and more sustainable future.