Kenya’s USD-to-RMB Debt Conversion Was Really a Restructuring

Kenya's conversion of its Standard Gauge Railway (SGR) debts to China Eximbank from U.S. dollars (USD) to Chinese renminbi (RMB) has been widely framed as a breakthrough for RMB internationalization and a clever way to reduce borrowing costs. However, based on newly disclosed details of the deal, this policy note demonstrates that Kenya's largest source of debt relief did not come from the currency conversion and benchmark rate change alone. Instead, we find that Kenya's savings were driven primarily by traditional sovereign debt restructuring tools—removing interest rate margins, adding new grace periods, and extending maturities. We explain how these changes will likely affect Kenya’s SGR debt service costs, including present value savings and near-term cash flow relief. We further explore what Kenya-style restructuring terms would mean for Ethiopia, where authorities have shown interest in an analogous deal with China Eximbank, as well as outline potential key lessons for other borrowers seeking to restructure their Chinese debts.

For more, see AidData's latest research examining the financial performance of China’s sovereign lending and decoding its playbook for debt restructuring.