Korea Seeks to Set Up Debt Exchange Plan

South Korea officials told international bankers that Seoul sought to develop a debt exchange that might guarantee $25 billion to $30 billion of commercial bank debt maturing in 1998, but the government did not want any part of a massive single bond offering. The bankers, who reconvened at Citibank’s New York headquarters to hear South Korea’s response to various proposals to ease the country’s debt crisis, viewed the talks as “positive and constructive.” A South Korean delegation that traveled to New York to present its government’s views made clear they did not consider an earlier proposal for a mega-bond issue floated among existing creditors and new investors to be a viable option. A Korean delegate at the talks affirmed that Seoul planned to raise new money as part of any overall solution but added that it was too early to specify what form of financing the Asian nation might choose. In a news release after the meeting, the bankers said the Korean delegation discussed developing a debt-exchange program that covered short-term maturities through the end of 1998. Banking sources involved with the talks said the Korean government would guarantee the maturities of its commercial banks coming due in 1998, though not the trade debt or securities of the banks. These obligations coming due this year totaled about $25 billion to $30 billion, sources said.