Brady Bonds

Brady Bonds are a type of debt instrument issued by developing countries to restructure their existing debt. Named after U.S. Treasury Secretary Nicholas Brady, these bonds were introduced in the late 1980s to help countries facing financial crises. They often involve converting defaulted loans into new bonds, which are typically backed by U.S. Treasury securities or other collateral. Investors buy Brady Bonds for potentially higher yields than other investments, while countries benefit from reduced debt burdens and improved creditworthiness, allowing them to rebuild their economies and access international financial markets more easily.