MEXICO: A Debtor's Swap Meet

A Debtor's Swap Meet

The U.S. has long officially kept up the increasingly shaky pretense that the Third World's $1 trillion debt should eventually be repaid in full. But now the Treasury Department has collaborated with the Mexican government and New York City's Morgan Guaranty Trust in devising a novel relief plan. The proposal calls for U.S. lenders to make voluntary concessions that could scale back Mexico's $106 billion in debts by as much as $10 billion.

Under the plan, U.S. banks would swap their Mexican debts at a markdown of as much as 50% for new bonds that pay a somewhat higher interest rate....

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