What are they waiting for?

The article discusses an agreement between Mexico and seven of the U.S.' largest banks in July 1986. The banks' agreement to reduce Mexico's foreign debt gives Mexico much-needed relief. But it values the Mexican loans at only 65 cents on the dollar. Mexico is one of the best credit risks among Latin debtors. If Mexican paper is worth 65 cents on the dollar, Brazilian paper, to say nothing of Argentinean, should be worth less. The major banks have already made massive additions to their loan loss reserves, but these cover only about 30 cents on the dollar. Many analysts suggest the banks should boost reserves to 50 cents for each dollar they have lent to less developed countries.