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Yugoslavia Wednesday signed a $1.2 billion refinancing agreement with...

By MARY TOBIN, UPI Business Writer

NEW YORK -- Yugoslavia Wednesday signed a $1.2 billion refinancing agreement with a group of 490 international banks that covers debt maturing through the end of 1984.

In a related announcement, West Germany's Dresdner Bank said signing of a $250 million loan to the Soviet Union put together by a consortium of 31 international banks had been completed.

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The Yugoslavian agreement covered payments falling due between Jan. 1 and Dec. 31, 1984, which were refinanced as a seven-year loan with a four-year grace period. Unlike its 1983 refinancing, which included $600 million in new money, Yugoslavia asked for no new loans.

The deal was completed at an interest rate roughly one-quarter percentage point lower than its 1983 refinancing signed last September.

Yugoslavia, whose total $19.5 billion in foreign loans makes it the 10th largest debtor in the world, has along with much of Eastern Europe, been steadily reducing its debt load.

Last year Yugoslavia obtained short-term loans from the International Monetary Fund, the World Bank, the Bank for International Settlements and the Paris Club. It successfully introduced a long-term stabilization program aimed at reducing its inflation rate which ran between 40 percent and 50 percent last year.

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Eastern Europe overall has reduced its debt load to western commercial banks from $59.4 billion at the end of 1980 to $50.6 billion at mid-1983, according to Stephen Pelletier, vice president at Manufacturers Hanover Trust in charge of its U.S.S.R-East European division.

'Lending never shut down completely,' Pelletier said recently in the bank's publication for its corporate customers. 'Some banks did withdraw, but many, including MHT, continued to view each East European country as having its own assets, liabilities and credit rating.'

He said there has been a 'cautious' increase in interest and willingness among western commercial banks in doing business with Eastern Europe. A harbinger of this interest was the loan announced Wednesday for the Bank for Foreign Trade of the U.S.S.R., he said.

The $250 million credit, the first large loan since the Soviet invasion of Afghanistan, was signed in Luxembourg.

Dresdner said a total of 31 western banks from 17 countries belong to the consortium in the five-year credit, co-managed by Dresdner, French Credit Agricole and Britain's Lloyds Bank International.

The credit originally was to have been for $150 million, but it was increased to $250 million because of its good reception by the market, Dresdner said.

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Pelletier said such syndications, although encouraging, 'are still more the exception than the rule; the renewed interest of most banks is in shorter-term trade-related transactions.

MHT is the agent bank on the Yugoslav refinancing, which is guaranteed by the Socialist Federal Republic of Yugoslavia.

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