Banks were willing to swap LDC loans for Brady bonds because:

Question

Quizplus · Accepted Answer

Banks were willing to swap LDC loans for Brady bonds because the bonds were marketable, meaning they could easily sell them in the secondary market, whereas the loans were not marketable. This allowed banks to get rid of risky and illiquid loans from their balance sheets and replace them with marketable securities. Additionally, Brady bonds were usually backed by collateral in the form of US Treasuries, making them less risky for banks compared to the original uncollateralized loans.

Banks Were Willing to Swap LDC Loans for Brady Bonds