AEROSPACE : Brazil Strikes a Deal on Its Debt Crisis : Latin America: The surprise agreement will reschedule and reduce by 35% the country’s massive foreign debt.

Brazil, the Third World’s biggest debtor, reached a surprise agreement Thursday on rescheduling and reducing its massive $44-billion debt to commercial banks, President Fernando Collor de Mello said.

The accord, which ends lengthy negotiations, covers Brazil’s medium- and long-term debt that will be convertible into guaranteed new bonds and loans.

The announcement came unexpectedly after Economy Minister Marcilio Marques Moreira had said on Wednesday evening that it might be delayed another week.

“We have reached a good understanding after nearly a year of negotiations,” Collor said in a note circulated to reporters. “The reduction foreseen in the debt is 35%.”

The agreement marks a “watershed, closing a long chapter overshadowed by foreign debt problems,” Moreira said in a joint statement issued by Brazil and the banks in New York, where negotiations took place.

The agreement spells the end to the debt crisis that has weighed on major Latin American economies for a decade, since Mexico first defaulted on repayments in August, 1982, said William Rhodes, vice chairman of Citicorp, which heads the 19-bank steering committee in the talks.

The Brazilian deal is similar to those concluded by Mexico, Venezuela, Costa Rica and Argentina in recent years.

Dubbed “Brady deals” after their architect, U.S. Treasury Secretary Nicholas F. Brady, the agreements offer debtor nations a reduction ranging up to 35% in the face value of what they owe.

Banks gain because the deals are backed by U.S. Treasury bonds bought by the debtor nation to guarantee payment of the capital at the end of the agreement.

Rhodes said in a statement that the accord will allow Brazil greater access to international capital markets. “This agreement further confirms the commitment by the government of Brazil to a viable economic reform process,” Rhodes said.

“By regularizing relations with the commercial banks, the country will be in a position to have greater access to international capital markets,” he said.

Brazil’s deal still depends, however, on the International Monetary Fund, World Bank and InterAmerican Development Bank putting up about $1.6 billion in new funding to provide the guarantees for the agreement.

Bankers say the Brazilian Economy Ministry has agreed to provide $1.6 billion from Brazil’s reserves to buy guarantees for the deal.

The two sides said the details of the accord will be available by the end of August and will be sent to all of Brazil’s more than 500 creditor banks and the country’s Senate, all of which must approve the deal.

The accord is the latest stage in Brazil’s rapprochement with the international financial community.