(Fixes grammar, 1st paragraph)
By Maria Eugenia Tello
LA LIBERTAD, Ecuador Dec 13 Ecuadorean
President Rafael Correa on Saturday warned bond-holders of a
hefty cut in the nominal value of defaulted global paper as
part of a restructuring plan he will offer them in coming
A day earlier Correa shocked bond-holders by declaring
default on $3.8 billion worth of global bonds in one of the
most aggressive moves against investors in Latin America for
years. He said the debt was contracted illegally by a previous
"We are preparing a restructuring plan with a very large
reduction of its (bonds) value," Correa said during his weekly
media address in the coastal town of La Libertad.
"What has been done with our debt is immoral ... that debt
has been paid over many times."
Last month, Ricardo Patino, a top debt adviser to Correa,
said investors should expect a reduction of more than 60
percent in the nominal value of the paper in a restructuring.
Correa also said his government is ready for a slew of
potential lawsuits by angry bondholders who will seek repayment
from the oil-producing country that boasts the debt default was
decided based on morality and not on lack of cash.
However, in rare comments Correa admitted the grave risk
his Andean nation faces with a debt default.
"If this (default) costs the country too much then the
country has to decide if I should continue as president,"
Correa said. "I have lost sleep over this ... this will cost us
tears and sweat but I think we are doing the right thing"
Correa, whose political slogan is "life before debt," is
popular among Ecuadoreans for his stance against foreign
He has already forced foreign companies to change contract
terms in the oil and mining industries and ejected a major
Brazilian building company in a dispute over a dam construction
as he seeks to increase state income.
The default will likely lead to drawn-out investor lawsuits
against Ecuador, further close off credit lines to the oil- and
banana-exporting nation and cause foreign investment into areas
such as mining to dry up.
(Writing by Alonso Soto; editing by Jackie Frank)