3 Latin debtor nations seen facing tough task in restructuring loans.

NEW YORK - Peru, Panama, and Ecuador, the "exotics" of the latin America debtor community, line up next month to tackle their debt residue from the 1980s with little hope of a miracle.

Following in the footsteps of powerful, highly indebted neighbors like Mexico and Argentina, the three countries will hold separate talks with creditor banks in New York Sept. 8-10 with an eye to restructuring their debts under the Brady plan.

"It's generally assumed there could be Brady deals for countries like Ecuador, Peru, and Panama," said a bank source. But "it doesn't necessarily mean they are about to happen."

|Roadblocks in Panama'

The source, who is close to the Panamanian restructuring committee, listed some of what he called the "roadblocks" to reaching a solution to Panama's $2 billion problem.

To see the way the price of Panamanian debt has rallied to around 40 cents on the dollar from the mid-30s since the September talks were scheduled, one would think a breakthrough was imminent.

But the banking source noted that the banks know of no new developments since a meeting in April..

Eurobond Default

The country is also unable to resume partial interest payments until it has won approval for next year's budget, which has a Dec. 31 deadline. The banks will not know if any payments are in the works until the beginning of next year, the source said.

He added that before striking a deal with the banks, Panama has to repair relations with the International Monetary Fund and the World Bank.

Another hurdle is that Panama is one of a handful of countries to have defaulted on Eurobonds.

"A Brady deal involves converting medium-and long-term debt into bonds. It would be rather difficult to pull that off if their record shows they are in default on (other) payments," he said.

Peru holds its first meeting with its Citicorp-led steering committee on Sept. 8, also billed as an "exploratory" affair.

Size of Arrears Causes Concern

Throughout the year, Peruvian loans have rallied in the secondary market, more than doubling in value to their current level of around 41%, which traders largely attribute to the huge stock in interest arrears carried with the paper.

But the stock of arrears, which in the past have come at a low premium with the purchase of Peruvian debt in the secondary market and represent the potential for rich pay-offs, could prove to be a headache.

In classic Brady restructurings, arrears have often been securitized into new bonds. Bankers, however, are concerned that the size of the arrears in poverty-stricken Peru will make it hard for it to afford such a conversion.

According to some analysts, Peru owes $4 billion in principal and as much as $4.5 billion in interest arrears.

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