Brady bonds and disintermediation have transformed the sovereign
debt market and, as a result, sovereigns Wnding themselves in
diYculties have had to engage in a process of dialogue with as wide
an investment community as possible. Unfortunately, parallel shifts
in this market mean that the opportunities for dialogue in
sovereign reschedulings are being eroded and the future for these
deals is hard to predict.
By the mid-1990s, it would be fair to say that the
Brady process of resolving government debt defaults had been
successfully established. Brady deals, which were enthusiastically
taken up by non-bank bond market investors, had become the expected
restructuring package. Poland, Bulgaria, Mexico, Brazil and
Argentina were all examples of countries where, to a greater or
lesser extent, this technique had proved successful. These deals
were put together by committees, with discussion and negotiation
underpinning their entire framework (much as their predecessors,
Baker deals, had been handled). CliV Godfrey, partner at CliVord
Chance with some...
