Some of the bonds, with expiration dates in 2012, 2015 and 2030, originated as part of debt restructuring after Ecuador's economic crisis between 1999 and 2000, when the banking system collapsed and the country defaulted for the first time on its foreign debt.

Correa has long threatened a default to prioritise social spending in the country, accusing former government officials and bankers of profiting from the bonds.

"We know very well who we are up against - real monsters," he said on Friday.

"If we have to face international litigation due to this, we will."

Wrongdoing

A presidential commission last month recommended that Ecuador default on almost 40 per cent of foreign debt.

The report also alleged former Ecuadorean officials and investment banks, including US-based JP Morgan and Salomon Smith Barney, now part of Citigroup, had mishandled debt restructuring in 2000, when the country's banking system collapsed, and in 2005.

Officials involved in the deals have denied any wrongdoing.

Correa has also said that two of the bond sets, due in 2012 and 2030, were issued without presidential authorisation and dates on the documents were altered.

The president is now expected to offer bond holders a tough restructuring deal that reduces the value of the bonds by as much as 60 per cent. 

It was the third time in 14 years that Ecuador had defaulted on a payment and the move could effect its access to credit as it confronts a budget shortfall caused by the falling oil price.

Oil finances 40 per cent of the national budget and the government under Correa has spent heavily on social progammes, such as support for single mothers, buying seeds for farmers and providing building material for new homeowners.

Ecuador says it has worked to shield itself from fallout from the default by securing a $1 billion credit line from the Andean Development Bank and talking to allies, such as Iran, about possible loans.