Brazil and its foreign creditor banks agreed early Thursday on a reduction of that country's medium- and long-term borrowings.

The agreement, one of the most complex to date, covers about $44 billion in borrowings, up from previous estimates by bankers of $41 billion.

6 Options Offered

Under the agreement, banks will be able to pick one or more of six options:

* 30-year Brazilian government bonds at a 35% discount, bearing an interest rate of the London interbank offered rate plus 0.813%. The bond's principal will be collateralized by zero-coupon U.S. Treasury bonds; 12 months' worth of interest payments will also be collateralized by short-term securities.

* 30-year Brazilian bonds at face value, bearing an annual interest rate rising from 4% to 6% over seven years. U.S. Treasuries will be used as collateral for the bonds' principal. One year's worth of interest will be collateralized by other securities.

* 15-year front-loaded interest-reduction bonds, with an interest rate rising from 4% over the first two years to Libor plus 0.813% after seven years. These bonds will have a nine-year grace period, with interest collateralized annually for the first six years.

* New money in the form of 15-year loans with a seven-year grace period at Libor plus 0.875%

* Converting outstanding loans into new 20-year loans with a 10-year grace period and interest rising from 4% a year to Libor plus 0.813% after six years.

* So-called capitalization bonds that add a portion of the interest due to principal for the first six years, with interest rising from 4% initially to 8% after six years.

William Rhodes, a vice chairman of Citicorp and head of the bank advisory committee on Brazil, said the long list of options was needed in order to allow banks the broadest range of choices possible. "The banks wanted a wide variety, and that's what they're getting," he said.

Brazil will provide about half the $3.2 billion needed to guarantee the agreement; banks and international lending agencies such as the International Monetary Fund, the remainder.

Brazil halted interest payments on its foreign commercial bank borrowings in July 1989 and is now paying about 30% of interest due.

As part of the agreement, the country plans to issue $6 billion in bonds to cover its interest arrears.

Last Significant Debtor

Brazil is the last major developing-country debtor to come to terms under an initiative launched three years ago by U.S. Treasury Secretary Nicholas F. Brady. The agreement concluded negotiations that began in October 1990.

Completion of the talks was repeatedly held up by arguments over how much financing Brazil would provide to guarantee the agreement and how the guarantees would be applied.

Mr. Rhodes said he hoped to send a term sheet on the agreement to more than 500 banks by August and to sign a final agreement this year.

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