LONDON (Reuters) - Bermuda-based Signet Jewelers Ltd, the world's biggest speciality jeweller, has negotiated a relaxation of a key part of its borrowing agreements in exchange for paying a higher interest rate, it said yesterday.

The firm, which has been hit hard by an economic downturn in both its US and UK markets, said it had renegotiated the most stringent condition of its original agreements, covering the ratio between its fixed charges and its earnings.

It added that it expected to comply with the terms of the original agreements when it announces results for the year ended Jan. 31 on March 25.

Signet said the agreements related to a $380 million 2013 to 2018 US Private Placement Note Term Series Purchase Agreement and a $520 million unsecured multi-currency five year revolving credit facility.

The firm, which runs Kay and Jared stores in the United States and Ernest Jones and H Samuel in Britain, will prepay $100 million of the notes at par plus accrued interest on March 18.

It will also reduce the revolving credit facility, of which it had drawn down $135 million at Jan. 31, to $370 million to take into account its more conservative expansion plans.

It will pay an increased margin on the facility of 2.25 percent above LIBOR, from 1.2 percent above LIBOR previously, subject to an adjustment depending on its performance.

Amendment fees and other related costs of $9.5 million will be charged in fiscal 2010, it said in a statement.