Rwanda, faced with a cut in international aid for the past several months, on Thursday became the first country in east Africa to turn to international markets to raise funds by launching a $400 million 10-year bond.
Investors, attracted by the country's buoyant economic growth, bid more than $3 billion, which was issued with a yield of 6.875%, market sources said.
"It was preceded by an expensive roadshow in Hong Kong, Singapore, London, Munich, Frankfurt, Boston, where it was very well received," said Nick Darrant, emerging market manager at BNP Paribas, which handled the issue along with Citigroup.
Rwanda's finance ministry said the order books closed at "at over $3.5 billion with 250 investors participating".
The issue will enable Rwanda to repay government loans, complete a conference centre in the capital and finance a hydro-electric power project that will enable it to reduce its imports.
Turning to global financial markets will allow Rwanda, whose population is largely rural and who last year posted per capita income of just $664, to diversify its sources of funding and to "narrow the funding gap for its infrastructure investments", Mark Bohlund an economist who follows Sub-Saharan Africa for IHS Global Insight said.
Rwanda, whose infrastructure, economy and social fabric were destroyed less than two decades ago by the genocide of 1994, posted 8% economic growth last year, despite cuts in international aid, and could post 7.5% growth this year, according to a forecast by the International Monetary Fund.
Over the past five years, growth has averaged 8.2%, according to government figures.
The geographical breakdown of investors was 40% from the United States, 33% from Britain, 8% from Switzerland, 6% from Asia, 5% from Belgium and Luxemburg and 4% from Germany.
The majority of them -- 83% -- are fund managers and 10% are banks.
"It wasn't as oversubscribed as Zambia in September last year, but still shows a healthy appetite for Sub-Saharan African sovereign debt," Bohlund of IHS Global Insight said.
Fitch and Standard and Poor's (S&P) both gave a "B" rating with outlook stable to the new sovereign debt.
"Rwanda's rating is supported by solid economic policies and a track record of structural reforms, macroeconomic stability and low government debt" (23.3% of GDP in 2012), Fitch said in a statement.
S&P for its part focused on Rwanda's success in poverty reduction.
But both agencies warned of "structural weaknesses", citing low per capita GDP, an economy not sufficiently diversified and a "narrow and volatile export base".
S&P also cited "lingering political risks, including the recent resurgence in regional tensions" as a concern.
Accusations -- denied by Rwanda -- that Kigali was backing a rebel group in neighbouring Democratic Republic of Congo caused several donor countries to freeze, partially freeze or delay aid or budget support to Rwanda, obliging Rwanda to cut spending in its revised budget.
The bond is therefore of vital importance to Rwanda's economy but could also serve as a test for the east African region.
Kenya has said it intends to launch a $1 billion bond this year and Tanzania has expressed similar intentions without quoting numbers.
The good reception for Thursday's issue "should therefore indicate strong demand for other Sub-Saharan African sovereigns issuing debt, both Angola, Ghana and Nigeria (which have issued debt before) and debutants like Kenya and Tanzania," Bohlund of IHS Global Insight said.
In a statement Thursday evening, Kigali said the "issuance of the bond reflects Rwanda's push to become less dependent on international aid."