This move could set a new precedent, reducing Nairobi’s reliance on US currency while meeting Beijing’s goal of increased trade deals in Yuan.
Kenya’s plan to convert its US dollar-denominated Chinese debt to yuan is a “win-win”, as it is expected to reduce interest payments for the African nation while advancing China’s goal of increasing the global use of its currency, according to analysts.
The deal would be precedent-setting and could establish a new rule book for future debt restructuring and possibly cut reliance on the US dollar.
In late August, Kenya’s Treasury announced that talks with the Export-Import Bank of China were at an advanced stage to extend maturities and swap dollar-denominated debt into yuan to ease pressure on its foreign reserves.
If successful, it would see interest rates on the loans secured for the Standard Gauge Railway (SGR) halve from 6.37 per cent under existing dollar-denominated loan terms.
The East African nation had in 2014 and 2015 secured two loans worth about US$5 billion (35 billion yuan) to build the 480km-long (298-mile) Standard Gauge Railway line connecting the port city of Mombasa with the capital city of Nairobi and a 120km extension to Naivasha in Central Rift Valley. (South China Morning Post)
