Cote d'Ivoire: Flirb bulls undermine the Brady

With interest rates so low and optimism for emerging markets so strong, investors are willing to take greater risks to achieve higher yields. So theoretically it's a good time for Côte d'Ivoire to unveil a plan to reschedule its debt via a Brady plan, only the second in Africa after Nigeria's. However, bullishness about emerging markets could be an obstacle to the Ivorian Brady plan, which is due to be implemented by the second quarter of 1997.

The Brady plan envisages a debt buy-back of a minimum of 30% of the principal at a rate of 24 cents in the dollar and cancellation of corresponding past-due interest. The remaining eligible interest will be exchanged for past-due interest bonds with a 20-year maturity. The 70% remaining principal owed will be paid off with a choice of a 30-year discount bond or a 20-year front-loaded interest reduction bond (flirb) at...