FACTBOX-Key political risks to watch in Rwanda

EMERGING CAPITAL MARKET

Established in 2008, Rwanda's Over The Counter stock market lists three Treasury bonds and a 10-year Commercial Bank of Rwanda bond. The only listed equity is the cross-listing of Kenya Commercial Bank (KCB.NR). Its shares have seen a total turnover of $24,000 since cross-listing in June last year.

The securities listed on the capital market include the government 3-year $9million bond issued in Febuary 2008. Three more government bonds of $4.5 million (Rwf 2.5billion) $2.7 million (Rwf 1.5 billion) and $13.8 million (7.6 billion Rwf) were issued in January, April and August 2010.

Last week, Rwanda's central bank said the auction of a 2-year bond was 200 percent oversubscribed, demonstrating market liquidity and investor interest. [ID:nLDE67N0YD]

Previous uptake has been weak because government paper is being bought mostly by institutional investors who are holding on until maturity, says the regulator Capital Market Advisory Committee (CMAC).

What to watch:

-- More government bonds and new listings. The central bank will issue quarterly bonds to fund energy and infrastructure projects and also help ease dependence on donor funding, which currently comprises around 40 percent of the budget.

However, the regulator says this would not significantly increase liquidity because small volumes are being talked about.

-- CMAC expects four Kenyan companies -- including Equity Bank (EQTY.NR), KenolKobil (KENO.NR), TPS Serena (TPSE.NR) -- will cross-list by the end of 2010 as part of a drive into new markets. This will boost the capitalisation of a market where domestic options are limited.

-- The government plans to sell 30 percent of brewer BRALIRWA. This had been expected either side of the election.

CMAC says the IPO reflects the government's confidence in the strength of the domestic economy. Officials predict double digit growth in two years, up from around 5.5 percent in 2009.

-- The sale of the government's 10 percent stake in telecoms firm MTN has been slated for 2011, CMAC says.

-- For now, Rwanda has no plans for a Eurobond. Last week ratings agency Fitch upgraded Rwanda's long-term foreign and local currency issuer default ratings to B from B- with a stable outlook and also upgraded the country ceiling to B from B-. [ID:nWLA1380 ] Fitch said the upgrades reflected an uninterrupted period of strong growth and the improvement in Rwanda's business environment following an "impressive" structural reform drive. (Editing by Richard Lough and Alison Williams)