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 20 years' experience advising creditors' committees in debt reschedulings, says: "In a typical Brady deal, discussions were held between the lenders and the debtors on the process to be followed and the desired solution.