Nigeria, Philippines, Poland, Uruguay, and Venezuela. Participating countries were to liberalize their economies in order to qualify for Brady Bonds. The Brady Bonds were credited for resolving the Latin American debt crisis, but did not prevent future looming debt crises. Types There were two main types of Brady bonds: Par bonds were issued to the same value as the original loan, but the coupon on the bonds is below market rate; principal and interest payments are usually guaranteed. Discount bonds were issued at a discount to the original value of the loan, but the coupon is at market rate; principal and interest payments are usually guaranteed. Other, less common, types include front-loaded interest-reduction bonds (FLIRB), new-money bonds, debt-conversion bonds (DCB), and past-due interest bonds (PDI). Brady Bond negotiations generally involved some form of "haircut." In other words, the value of the bonds resulting from the restructurings was less than the face value of the claims before the restructurings. Guarantees attached to Brady bonds included collateral to guarantee the principal, rolling interest guarantees, and value recovery rights. Not all Brady bonds would necessarily have all those forms of guarantee, and the specifics would vary from issuance to issuance. Current status Although the Brady bond process ended during the 1990s, many of the innovations introduced in these restructurings (call options embedded in the bonds, "stepped" coupons, pars and discounts) were retained in the later sovereign restructurings in, for example, Russia and Ecuador. The latter country, in 1999, became the first country to default on its Brady bonds. In 2003, Mexico became the first country to retire its Brady debt. The Philippines bought back all of its Brady bonds in May 2007, joining Colombia, Brazil, Venezuela, and Mexico as countries that have retired the bonds. See also Debt Debt relief Sovereign default References External links Treasury press release on Mexico retiring its Brady bonds IMF press release on Mexico retiring its Brady bonds BBC story on Ecuadorean default Collective Action Difficulties in Foreign Lending: Banks and Bonds (FRBSF) 1989 in international relations Bonds in foreign currencies Economic history of the United States Government bonds History of the foreign relations of the United States