The Rwandan Government is finalizing plans for the issuance of a sovereign bond aimed at raising "about USD350million (RWF222billion)", part of which will be used to prop up national carrier Rwandair (WB) in whom government has a 99% shareholding. |
| Boeing 787 |
Should the issuance be successful, part of the money raised will go towards RwandAir whose finances are under strain owing to loans it took out two years ago to fund the purchase of a new fleet. Amongst the heavier loans is a facility for USD60 million (RWF35.8billion) signed in 2011 and secured from the Eastern and Southern African Trade and Development Bank (PTA), used for the purchase of two new Boeing 737-800NGs.
Whilst the need for a bailout for RwandAir has become urgent, the Rwandan Treasury says the issuance will only proceed once market conditions allow for a more conducive, and therefore beneficial, sale.
Whilst the need for a bailout for RwandAir has become urgent, the Rwandan Treasury says the issuance will only proceed once market conditions allow for a more conducive, and therefore beneficial, sale.
“The bond issuance will happen at a time that the government feels that market conditions are attractive so that we raise less expensive funds from the international market,” said Rwandan Minister of Finance and Economic Planning, Claver Gatete.
Source [Busiweek]
Known as Rwanda Express until its makeover into RwandAir in 2009, the airline has moved from strength to strength, recording an 80% increase in passenger numbers on the previous year, with 2013 expected to grow a further 39% on 2012. The airline also has plans to increase its fleet size from the current nine, to 17 (part of which includes options for two Boeing 787s) by 2015.
“We have plans that after 2015 – after we have consolidated as a regional carrier – we will start operating out of the continent into Europe and also China,” Chief Executive Officer of Rwandair, John Mirenge told Reuters.
Source [Ventures Africa]
However, despite its strong growth figures, the carrier's planned
privatisation bid (an IPO is slated for 2018 - 2020) has stalled because, according to Mr Mirenge, the company is not making any profits presently to attract investors.
“To be able to privatize or send floating shares to stock markets, there is a beautification process that takes place,” Mirenge said. “This process includes breaking even, keeping track records and engaging in a standardization process.”
Source [Bloomberg]
Rwandair is also competing in an increasingly cut throat East African market which is served by Kenya Airways (KQ), Ethiopian Airlines (ET), Air Uganda (U7), Precision Air (PW) and soon enough fastjet (FN) and Kenya Airways' nascent LCC wing, Jambo Jet.
