SAO PAULO -- Brazil's debt negotiators have reportedly reached a preliminary accord on bond repayment with commercial creditor banks.

The agreement in principle, reported in the Gazeta Mercantil newspaper, limits to 40% the amount of par bonds that each bank can use for its participation in Brazil's debt restructuring.

The accord also requires each bank to take at least 35% discount bonds, the paper said without naming a source.

Brazil's foreign debt negotiator, Pedro Malan, is in New York this week for talks with creditor banks on how to reduce and refinance $40 billion of commercial debt.

Under a previous agreement, banks had until March 15 to select among six repayment plans. But Brazil, which favors discount bonds, asked banks to revise their choices after they opted for a majority of par bonds.

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