Rwanda’s coupon rate for the Rwf15 billion ($21.8m) bond has been set at upper 11’s. The central bank announced on Wednesday the rate is between 11.5% and 11.99%.

The rate, described as ‘sweat deal’ by sector players, was determined by results from a market study.

The five-year Treasury Bond was issued on Wednesday Morning, August 27.

The central bank said the bond is raising funds to invest in infrastructure projects and stimulate the local capital market.

Due to its positive commercial nature, stockbrokers on the Rwanda’s Stock Exchange (RSE) have already speculated the results of the bond sale ahead of time. Celestin Rwabukumba, Coordinator of the RSE expects the bond to be oversubscribed.

He did not mention any numerical projections, but said he knows “It will be oversubscribed than the initial stock price.” According to Rwabukumba, the bond is not that lucrative persay, “But a less risky sure deal.”

Economists say Rwanda is a risk-free economy with minimal inflationary risks and an economic growth rate averaging eight percent over the past decade.

Shehzad Noordally, the Chief Executive Officer of CDH Capital Ltd, a local stockbroker says the bond is likely to shoot above 13 percent.

Noordally believes the issuance of such a mouthwatering bond is making heads roll in commercial banks, because “It will have huge deposits depleted.”

The government expect the ‘zero risk averse’ bond to trigger wealth redistribution and address inequality.

Meanwhile, brokerage firms have been courting and negotiating investors behind the scenes.

The bond follows Rwanda’s US $400 million debut Eurobond, issued on the Irish Stock Exchange on April 25, 2013, with an initial coupon rate of seven percent. The 10-year sovereign debt earned over US $3.5 billion in subscriptions from 250 investors.

In February, an Rwf 12.5 billion bond was issued receiving a 140 percent surplus subscription. On May 20, 2014, the International Finance Corporation tested the appetite on the local market by issuing an Rwf 15.5 billion ($22 million) bond selling at rate of 12.5 percent per coupon. It was oversubscribed by 110 percent.

Rwanda’s President Paul Kagame announced during the recent US-Africa Leaders Summit in Washington that the country will sell a $1 billion bond as its second international bond next year.

However, the market is still hungry for more.

Emmanuel Mugiraneza, Public Relations Officer at Capital Markets Authority (CMA) says the market needs more bonds from the government, Corporates, municipalities and bonds from other relevant institutions.

The government has pledged to release quarterly bonds, a move observers say will trigger a saving and investing culture among Rwandans.

By Magnus Mazimpaka