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Rwanda’s “junk” bond status doesn’t deter investors in end-run around aid cuts

This isn't getting much attention outside the business media, but I think it's worth a broader look. As I noted earlier, when Rwanda faced foreign aid cuts or freezes in aid due to allegations that President Paul Kagame was supporting a violent rebellion in neighboring Congo, Kagame simply announced he would get money by issuing a bond.
Paul Kagame
Paul Kagame

This isn’t getting much attention outside the business media, but I think it’s worth a broader look. As I noted earlier, when Rwanda faced foreign aid cuts or freezes in aid due to allegations that President Paul Kagame was supporting a violent rebellion in neighboring Congo, Kagame simply announced he would get money by issuing a bond.

And so they have, to the tune of about $400 million. As the Wall Street Journal and Bloomberg Business report, Rwanda has issued $400 million in 10-year sovereign debt that is popular with investors. Bloomberg’s report said Thursday that “the East African nation known for a 1994 genocide that killed 800,000 people, made its international bond market debut today. Investors seemed to like what they saw.”

The WSJ article noted:

Rwanda holds a “junk” rating from Standard & Poor’s Ratings Services and Fitch Ratings due to its heavy reliance on foreign aid and its turbulent recent history…. (but) is seen by investors as a country with high potential, with an economic growth rate averaging 8% over the past decade.

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Tom Paulson

Tom Paulson is founder and lead journalist at Humanosphere. Prior to operating this online news site, he reported on science,  medicine, health policy, aid and development for the Seattle Post-Intelligencer. Contact him at tom[at]humanosphere.org or follow him on Twitter @tompaulson.