Brady Bond Primer

Brady Bonds (current as of 1996)

  • Named after U.S. Treasury Secretary Nicholas Brady, who in association with the IMF and World Bank sponsored the effort to permanently restructure outstanding sovereign loans and interest arrears into liquid debt instruments.

  • Coupon bearing bonds with fixed, step or floating rate (or hybrid combination of each), having 10 to 30 year maturity.

  • Brady bonds have semiannual interest payments and generally amortize.

  • Principal and certain interest is collateralized by U.S. Treasury zero coupon bonds and other high grade instruments.

  • Creditor banks exchanged sovereign loans for Brady bonds incorporating principal and interest guarantees and cash payments.

  • Debtor governments had their principal, interest and interest arrears reduced.

  • Issued as Registered and Bearer bonds

  • Certain Par and Discount bonds incorporate value recovery rights or warrants.

  • Countries involved in the Brady Plan restructuring:

  • Argentina

    Brazil

    Bulgaria

    Costa Rica

    Dominican Republic

    Ecuador

    Mexico

    Morocco

    Nigeria

    Philippines

    Poland

    Uruguay

  • Potential future candidates for Brady Plan restructuring:

    • Ex-Soviet (Vnesheconobank), Nicaragua, Panama, Peru