(Bloomberg) -- An investment firm holding loans the Cuban government defaulted on decades ago is offering a deal it says would help the island return to international debt markets.

CRF I Ltd., the largest holder of Cuban debt in the London Club of private creditors, offered to convert about $1.4 billion of the securities into a zero-coupon loan with no payments until 2026, according to a copy of a letter seen by Bloomberg News. It’s addressed to President Miguel Diaz-Canel, who recently expanded his power by taking over as head of the Communist party, and Cuban diplomats.

CRF has held Cuban debt since 2009 has made repeated attempts to reach a settlement, including an offer in early 2018, to which it got no response. The firm said its latest proposal would allow Cuba to start to restore its image abroad and move away from its legacy as a serial defaulter, and said other London Club creditors would be likely to strike similar accords. The group holds about $4 billion of loans and other securities Cuba stopped paying when the late Fidel Castro was in power from 1959 to 2008.

“Cuba can move from being in arrears with the commercial creditors to regaining access to willing lenders in the global financial markets,” David Charters, the firm’s chairman, wrote in the letter.

CRF, which sued Cuba for nonpayment in a London court in February 2020 in a case that’s still being heard, declined to comment. The authenticity of the March 18 letter was confirmed by two people with direct knowledge of its content. Messages to Cuban diplomats and the president’s office weren’t returned.

Castro Era

The offer would represent a 60% writedown on the net present value of the securities, according to the letter. It was sent ahead of last week’s Communist Party congress in which Raul Castro ceded power to Diaz-Canel, a 61-year-old seen as being more open to reforms than his predecessors.

Cuba has made efforts to clear old obligations in recent years, most notably in 2015 when it settled with members of the Paris Club of wealthy nations, in a deal in which $8.5 billion was forgiven.

However, with its economic slide worsening over the past two years and shortages of basic goods growing, Cuba missed payments under the Paris Club deal in 2019. Last year, the two sides agreed to suspend payments for the year.

Cuba’s defaulted commercial paper, such as the securities held by CRF, had rallied as high as 36 cents on the dollar in late 2016 at the tail end of the presidency of Barack Obama, who had reached a historic agreement with Raul Castro to re-establish diplomatic relations. But as optimism for Cuba’s future has diminished, the loans, which are rarely traded, are now quoted for about 10 cents on the dollar.

If Cuba accepts CRF’s offer, it could provide a signal to other investors and the administration of U.S. President Joseph Biden that Diaz-Canel is open to change.

While Biden is considered more open than his predecessor to easing restrictions on Cuba, a White House spokeswoman has said a shift in Cuba policy isn’t a top priority for the administration.

“We urge you not to let this historic moment slip by again and hope for a positive response and engagement from your side,” CRF’s letter said.

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