What were the main characteristics of the Brady Plan?

What will be an ideal response?

The 1989 Brady Plan, developed by then U.S. Treasury Secretary Nicholas Brady, had the following important characteristics: 1) It put pressure on banks to offer some form of debt relief to developing countries. 2) It called for an expansion in secondary market transactions aimed at debt reduction. 3) The IMF and the World Bank were urged to provide funding for these "debt or debt service reduction purposes." 4) It offered banks a menu of different debt-reduction methods, including providing new loans. Each bank could choose the restructuring option that it found most suitable from a menu of possibilities established in a debt-reduction agreement between the debtor-country government and its creditor banks. In order to mitigate free-rider problems, no bank could opt out. Among the options available to the banks were the following:
? Buybacks: The debtor country was allowed to repurchase part of its debt at an agreed discount (a debt-reduction option).
? Discount bond exchange: The loans could be exchanged for bonds at an agreed discount, with the bonds yielding a market rate of interest.
? Par bond exchange: The loans could be exchanged at their face value for bonds yielding a lower interest rate than the one on the original loans.
? Conversion bonds combined with new money: Loans could be exchanged for bonds at par that yielded a market rate of return, but banks had to provide new money in a fixed proportion of the amount converted (an option for banks unable or unwilling to participate in debt reduction or debt service reduction).
Because the bond options were particularly popular choices, the Brady Plan ended up securitizing the debt into easily tradable bonds, called Brady Bonds. Quite a few Brady bonds have "official enhancements" attached to them, such as collateral provisions funded by international organizations and certain governments.