An Assortment of Brady Flavors

Article Index

 An Assortment of Brady Flavors

Par Bonds

  • Registered 30 year bullet amortization issued at par (or at the original face value of the sovereign loan)

  • Fixed rate semi-annual below market coupon (relative to interest rate environment at time of issuance)

  • Rolling interest guarantees from 12 to 18 months (2 to 3 coupon payments) until maturity

  • Generally principal is collateralized by U.S. Treasury zero-coupon bonds

Discount Bonds

  • Registered 30 year bullet amortization issued at discount (or at discount to original face value of sovereign loan)

  • Floating rate semi-annual LIBOR market coupon

  • Rolling interest guarantees from 12 to 18 months ( 2 to 3 coupon payments) until maturity

  • Generally principal is collateralized by U.S. Treasury zero-coupon bonds


Front Loaded Interest Reduction Bonds (FLIRB)

  • Bearer 18 year amortizing semi-annual bond initially offered with a fixed below market coupon rate which is later replaced by a LIBOR market rate until maturity

  • Rolling interest guarantees generally of 12 months available only during the first 5 or 6 years

Debt Conversion Bonds (DCB)

  • Bearer 18 year amortizing semi-annual LIBOR market rate issued at a par

  • No collateral is provided

New Money Bonds (NMB)

  • Bearer 15 year amortizing semi-annual LIBOR market coupon issued at par

  • No collateral is provided


Past Due Interest (PDI)

  • Semi-annual 12 year amortizing LIBOR market coupon issued at a discount

Capitalization Bonds (C-Bonds)

  • Issued in 1994 by Brazil in their Brady plan.

  • Registered 20 year amortizing bonds initially offered with a fixed below market coupon rate while stepping up to 8% during the first 6 years and holds until maturity.

  • However, these bonds capitalize (or add to principal) the interest difference between the current step coupon rate and the notional 8%, thus interest accrues on both the principal and any capitalized interest.

  • Both capitalized interest and principal payments are made after a 10 year grace period.

for additional information continue with Brady Bond Primer