South Korean officials are optimistic that they are close to striking a deal with international creditors on rescheduling the country's short-term bank debts.

After returning to Seoul from supervising South Korea's debt talks in New York, senior legislator Kim Yong-Hwan said an end to the tough negotiations was in sight.

"The deal has been going smoothly." he said. "I hope a preliminary agreement will be in place to roll over our short-term debt next week."

Positive news for Seoul's financial district

Mr Kim said South Korea had proposed that $25bn due for repayment this year be converted into one-to-three year loans.

But he said South Korea should not be "too optimistic" as creditors were yet to accept terms such as interest rates on rescheduling the short-term commercial bank debt.

South Korean officials joined representatives from 15 international creditors in two rounds of talks in New York last week.

Short-term debt held by South Korean financial institutions came to $37.4bn as of December 30, with long-term obligations estimated at $40.4bn.

A third round of talks is due to begin on Monday.

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