Brazil and its foreign creditor banks began Monday to sign a $52 billion debt restructuring deal, after nearly three years of frequently difficult negotiation.
Citicorp vice chairman William Rhodes said that banks and other creditors holding 89% of the debt had signed the agreement as of Monday afternoon.
Closing Set for April 15
Brazil is the last big debtor country to arrange a debt reduction agreement with foreign creditors under an initiative launched in 1989 by former U.S. Treasury Secretary Nicholas F. Brady.
The agreement is scheduled to close by April 15.
At closing, creditors would be able to exchange Brazilian loans they hold for several types of Brazilian government bonds at a discount of 35% of principal or interest.
Brazil will also issue 12-year bonds at closing to settle its interest arrears for 1991, 1992, and 1993 up until the date of the exchange.
Bankers and observers speculated last month that Brazil would be unable to get an agreement after the Brazilian government rejected demands by the Dart family, owner of Dart Container Corp., to exchange large amounts of Brazilian debt purchased on secondary markets for a single type of bond.
But Citicorp's Mr. Rhodes said he expects creditors accounting for 95% of Brazil's debt - or enough for the deal to go through - to sign the agreement by the end of December.
U.S. money-center banks still hold a sizeable amount of Brazilian loans.
However, most other U.S. banks have long since sold their loans to traders and investors in the secondary market.