Rwanda to Pay Airline Debt, Fund Hydropower With Bond Proceeds

Rwanda will use part of the funds from its debut dollar-bond sale to pay for the construction of a 28-megawatt hydropower plant that will be fully operational by June 2014, Finance Minister Claver Gatete said.

The east African nation will add 14 megawatts of power by December and the rest by June next year, he said in an interview at the World Economic Forum for Africa in Cape Town. The remaining the money will be used for the construction of a hotel and pay off some of state-owned RwandAir’s debt, he said.

“We didn’t just go to the market to look for any amount of money -- we went for specific projects,” he said. “We have to be very careful when we go to the market and defining what the money will be used for.”

Rwanda, the site of a genocide that left 800,000 dead 20 years ago, sold $400 million of debt last month, joining African nations from Nigeria to Senegal that are seeking to fund infrastructure projects in the world’s second-fastest growing region. Rwanda decided against selling more bonds after it received about $3.5 billion in orders.

The country is open to selling more debt if it needs to fund “high-impact” projects that are ready to be built in the tourism and energy industries, Gatete said.

The yield on the 6.875 percent dollar bond due in May 2023 was little changed at 6.9 percent today. The nation’s credit rating is B, five levels below investment grade, with a stable outlook at Standard & Poor’s.

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