Ecuador has cash to buy back defaulted debt - Correa

QUITO, March 23 - Cash-strapped Ecuador has money to buy back defaulted bonds as part of restructuring offer that will be unveiled in late March, President Rafael Correa said in an interview on a local radio station.

"We have taken the needed precautions; we left room in the budget for this possibility," Correa said on radio Mundo when asked if his country had funds for a buyback.

Correa said the government would announce details of the restructuring and buyback proposals on March 27 or 28 during a meeting of the Inter-American Development Bank.

He said the "amount of the discount" on the debt's nominal value would also be revealed at the meeting in Colombia. Analysts expect him to push hard for big discounts from debtholders.

The leftist leader shocked financial markets late last year by refusing to pay $3.2 billion in global bonds due in 2012 and 2030 that he deemed as "illegal" or over-valued when issued by past governments.

The debt default, Latin America's second since 2002, has hurt the OPEC nation's banking sector, which is starved for cash, and shut off the government from international credit markets.

Correa, a former economy minister widely popular among the poor for his tough moves against foreign investors, is likely to offer a tough renegotiation to debtholders, experts say.

Although he is widely expected to easily win re-election on April 26 Correa often uses his electoral campaign to toughen his anti-market rhetoric popular among Ecuadoreans.

In the interview, he reiterated Ecuador should have bought back the defaulted Brady bonds at 15 or 20 percent of its value in the 2000 restructuring that led to the global paper issuance. Analysts say Correa's comments signal a large haircut or discount in the nominal value of the global debt.

The scope of the debt buybacks could be complicated by weak oil prices, which are a key revenue stream for Ecuador.

Some traders and analysts say Correa probably bought back part of the globals at a cheaper price when he started default threats back in November. If that is true, Correa will need less money to buyback the rest of the paper left in market hands.

Correa, who calls Wall Street investors "greedy vultures," said he has no rush to return to the international markets for fresh capital even as the crisis hits the economy.

"We don't trust those international markets that are the cause of the current crisis and the recurrent crises in Latin America," Correa said when asked if he planned a new issuance of bonds after renegotiating its defaulted debt.

"We have another vision based on cooperation between countries... and with multilateral lenders."

Ecuador is asking for $1.5 billion in regional multilateral loans, including from the IADB, and is seeking financing for projects ranging from oil refineries to power plants as state coffers quickly run out of U.S. dollars.