The advantage to the lender (purchaser) of a Brady bond versus a loan to a foreign country is that U.S.Treasury bonds serve as collateral for Brady bonds.

Question

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Brady bonds are issued as part of a debt restructuring program for developing countries. The U.S. Treasury bonds serve as collateral for these bonds, which gives lenders increased security and lower risk than making a loan directly to a foreign country.

The Advantage to the Lender (Purchaser) of a Brady Bond