Brady bonds

Brady bonds

Bonds issued by emerging countries under a debt reduction plan.

Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Brady Bond

A bond issued by the International Bank for Reconstruction and Development to Latin American countries starting in 1989 and continuing into the 1990s. It effectively refinanced the bonds issued by Latin American countries after many defaulted on their national debt in the 1980s. Many bonds issued in the region prior to this were illiquid; Brady bonds were tradable and, for that reason, were more attractive to investors. Because many of them were guaranteed by U.S. Treasury bonds, they also carried less risk. In 1999, Ecuador defaulted on its Brady bonds. However, in 2003, Mexico retired its Brady bond debt completely.

Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

Brady bonds

Dollar-denominated bonds of developing countries backed by zero-coupon U.S. Treasury securities. Although no longer in use, Brady bonds were issued in exchange for defaulted commercial bank loans.

Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.