II Recent Developments in Private Market Financing for Developing Countries
- International Monetary Fund
- Published Date:
- January 1991
Since the onset of debt-servicing problems in the J early 1980s, private market claims (external bank loans and bonds) on developing countries (Table 1) have virtually stagnated. After increasing somewhat in 1989 (by $13 billion), total claims on all developing countries (excluding offshore centers) rose by only $5 billion in 1990. The bulk of the movement was accounted for by cross-border bank claims. The increase in such claims fell from almost $11 billion in 1989 to $3½ billion in 1990 (a growth rate of some 1 percent), as debt reduction operations by a number of developing countries largely offset both the accumulation of interest arrears by several others and continued voluntary lending to developing countries in Asia. A sharp slowdown in debt reduction activity in early 1991—combined with continued interest arrears and further strong lending to Asian countries—led to a relatively pronounced increase in bank claims on developing countries in the first quarter of the year; quarterly data often show sharp swings, however, and the underlying trend continues to be one of extreme caution in bank lending to developing countries.
|International lending through banks and bond markets|
|Bond issues (net)3,4||62||77||87||51||77||97||43||26|
|Change in bank claims1,2|
|Growth rate (in percent)||7||10||17||20||11||15||12||…|
|International lending to industrial countries|
|Bond issues (net)3,4||51||63||77||44||67||81||35||21|
|Change in bank claims1|
|Growth rate (in percent)||8||13||21||21||14||15||13||…|
|International lending to developing countries5|
|Bond issues (net)3,4||3||4||2||1||2||2||1||—|
|Change in bank claims1|
|Growth rate (in percent)||2||1||—||4||–1||2||1||…|
|Total gross bond issues||110||168||227||181||227||256||229||80|
Bond issues by developing countries, as reported by the Organization for Economic Cooperation and Development (OECD), amounted to $1 billion in 1990. Market-based data with more comprehensive coverage (including fuller reporting of private placements) point, however, to a higher figure for total bond issuance—some $3 billion—largely because of placements by Mexican borrowers (see Chapter III). Preliminary market-based data point to a further expansion of developing country bond placements during 1991. Over the last two years, these developments were accompanied by further changes in the underlying structure of developing country financing. These included a sharp reduction in the importance of principal rescheduling and concerted new money packages, more widespread use of market-based debt- and debt-service reduction operations, and the restoration of access to voluntary capital market flows by some countries with recent debt-servicing problems.
Bank Claims on Developing Countries2
International banking activity in developing countries during 1990 was dominated by a $28 billion fall in claims on the 15 heavily indebted countries (Table 2 and Chart 1). The bulk of this decline was accounted for by Mexico and Venezuela, which finalized comprehensive restructuring packages incorporating bank debt reduction elements during the year (Table 3). At the same time, the build-up of interest arrears by Argentina was more than offset by the elimination of debt through debt-equity swaps implemented in connection with that country’s privatization program. A further reduction in bank claims resulted from ongoing debt conversion programs in Chile, the Philippines, and Yugoslavia (totaling $2 billion); in contrast, bank claims on Brazil rose by $3 billion as interest arrears continued to accumulate.
Chart 1.Change in International Bank Claims, 1983–First Quarter 19911
Sources: Bank for International Settlements, International Banking and Annual Report; International Monetary Fund, International Financial Statistics; and IMF staff estimates.
1These data do not net out interbank redepositing.
|Total change in claims2||278||539||798||554||840||742||52|
|Capital importing developing countries3,7||5||3||21||–9||6||5||11|
|Non-oil developing countries3,8||3||3||22||–10||7||7||15|
|Fifteen heavily indebted countries||–6||–1||2||–15||–3||–28||1|
|Total change in liabilities9||301||584||760||540||812||645||–48|
|Capital importing developing countries3,7||21||8||36||25||59||70||–3|
|Non-oil developing countries3,8||16||16||36||25||53||60||–5|
|Fifteen heavily indebted countries||5||–4||10||5||17||21||–1|
|Change in total net claims10||–23||–45||38||14||28||96||100|
|Capital importing developing countries3,7||–16||–5||–15||–34||–53||–65||14|
|Non-oil developing countries3,8||–13||–13||–15||–35||–47||–53||20|
|Fifteen heavily indebted countries||–10||3||–7||–20||–20||–49||2|
|Developing countries and areas||3.8||2.5||22.0||–4.6||10.9||3.6||13.0|
|Growth rate (in percent)||1||—||4||–1||2||1||…|
|Taiwan Province of China||—||7.1||13.3||–1.7||0.2||0.7||1.4|
|Fifteen heavily indebted countries||–5.5||–1.4||2.4||–14.6||–2.9||–28.0||0.8|
|Countries experiencing debt-servicing problems||–7.5||–6.4||0.9||–16.5||–4.6||–22.7||0.1|
|Gross concerted lending disbursements3||5.4||3.3||5.7||6.0||0.6||1.8||—|
|Gross bond issues||8.1||4.2||3.7||6.0||4.5||5.1||1.5|
Most geographical regions—except Asia and, to a lesser extent, Europe—recorded a decline in bank claims on developing countries during 1990 (Tables 4, A1, and A2). Claims on Western Hemisphere developing countries fell by $21 billion; in the Middle East, uncertainties associated with the military conflict contributed to a $1½ billion decline in claims (compared with average annual increases of almost $5 billion in the previous two years); and African countries’ indebtedness to commercial banks fell by $600 million, the fifth consecutive annual decline. By contrast, bank claims on developing countries in Europe increased by approximately $4 billion. This growth reflected, among other things, increased net borrowings by Turkey (over $3 billion) and the accumulation of interest arrears by Poland (approximately $1 billion), which more than offset the impact of debt conversions in Yugoslavia and continued bank reluctance to lend to countries in Eastern Europe. Asia accounted for the largest rise in bank claims ($23 billion). This reflected, in part, larger net lending to Indonesia ($8 billion), China ($7½ billion), and Korea ($4 billion). Claims on the Philippines and India declined by $1½ billion.
|Total change in claims on developing countries2||3.8||2.5||22.0||–4.6||10.9||3.6||13.0|
|Total change in liabilities to developing countries2||22.9||–6.8||47.6||36.8||74.2||72.1||–6.7|
These changes in bank claims were accompanied by a further evolution in the structure of new gross lending to developing countries. This was most apparent in the data reported by banks on their long-term loan commitments. While the magnitude of total international bank credit commitments to developing countries in 1989 and 1990 was broadly similar—at about $19 billion (Table 5)—the share of concerted new money loans fell further (from a peak of 33 percent in 1987 to 7 percent in 1990). This trend continued in the first quarter of 1991, with spontaneous credit accounting for all new long-term commitments by banks (Tables A3 and A4).
|(Long-term external credit commitments)|
|Offshore banking centers||0.9||0.4||0.7||0.3||0.4||2.4||3.0||0.2||0.7|
|Other countries n.i.e.||1.9||3.5||2.1||1.5||2.5||1.5||3.0||—||—|
|International organizations and unallocated||3.5||4.0||5.2||11.7||10.0||3.3||7.3||0.5||0.9|
|(Other international long-term bank facilities)|
|Offshore banking centers||0.4||0.2||0.2||0.3||0.2||0.3||0.3||—||0.1|
|Other countries n.i.e.||—||—||0.5||0.2||0.2||0.1||—||—||—|
|International organizations and unallocated||0.6||2.1||0.3||1.7||—||0.2||—||—||—|
|(Total international commitments)|
|Offshore banking centers||1.4||0.6||0.9||0.6||0.6||2.7||3.3||0.2||0.8|
|Other countries n.i.e.||1.9||3.5||2.6||1.7||2.7||1.6||3.0||—||—|
|International organizations and unallocated||4.1||6.2||5.5||13.4||10.0||3.5||7.3||0.5||0.9|
In terms of overall bank balance sheets, available data point to a further fall in exposure to developing countries.3 Banks reporting to the Bank for International Settlements (BIS) experienced a 5 percent reduction in total nominal exposure on developing countries between the end of December 1989 and the end of June 1990, the latest period for which comprehensive data are available (Table A5). In the case of U.S. banks, reported claims fell by 13 percent in 1990 (Table A6). This was reflected in a further decline in the importance of developing country claims relative to other balance sheet items. Specifically, the ratio of capital to claims on developing countries continued to increase, reaching 232 percent at the end of 1990—almost twice the end-1987 level (Table A7 and Chart 2). Moreover, the share of external claims on developing countries in total bank assets declined further to an estimated 3.7 percent.
Chart 2.Selected Balance Sheet Data for U.S. Banks, 1977–1990
Source: Federal Financial Institutions Examination Council, Country Exposure Lending Survey.
1Excluding offshore centers.
Terms on Long-Term Bank Credit Commitments
Average spreads on all bank loan commitments to developing countries (spontaneous and concerted facilities) have declined substantially since 1983, reaching 68 basis points over LIBOR in 1989 and falling to 60 basis points in 1990 (Table A8 and Chart 3). This tendency was reversed in the first four months of 1991 as a result of the absence of concerted new money commitments (which have carried relatively lower spreads), combined with higher spreads on spontaneous credits to several countries that have not restructured their debt and a change in the composition of borrowers. The spreads on both concerted new money commitments and rescheduled principal obligations fell substantially in the mid-1980s and have since then remained in a range between 80 and 95 basis points (Table A9). Average spreads on spontaneous commitments amounted to 60 basis points in 1990, broadly the level that prevailed in the mid-1980s. Annual fluctuations in spreads have tended to reflect, to a large extent, changes in the composition of borrowers, as well as in the structure of loans (particularly the degree of securitization). Preliminary indications are that several developing countries, including those that have regularly serviced their debts and not resorted to commercial bank debt restructurings, experienced an increase in spreads early in 1991 (Table A10).
Chart 3.Terms on International Bank Lending Commitments, 1973–1990
Sources: Organization for Economic Cooperation and Development, Financial Market Trends; and IMF staff estimates.
1New publicized long-term international bank credit commitments.
The average overall maturity of long-term bank credit commitments to developing countries rose from 7.3 years in 1989 to 8.6 years in 1990. A further increase to 8.8 years was recorded for the first four months of 1991. These developments were the result of changes in maturity terms on spontaneous lending; the terms on concerted financing remained broadly unchanged, with the largest portion of rescheduled principal carrying a 15-year term.
Bank Debt Restructurings
Apart from the agreements with Niger and Uruguay,4 no comprehensive debt restructuring agreements were finalized in the first three quarters of 1991 (Tables 6 and A11–A15 provide details on commercial bank debt restructuring agreements). Two preliminary agreements, however, were concluded with Nigeria5 and the Philippines.6 Several other developing countries are in the process of negotiating packages with their commercial bank creditors. These include, but are not limited to, Argentina, Bolivia, Brazil, Bulgaria, Cameroon, Côte d’lvoire, the Dominican Republic, Ecuador, Gabon, Guyana, Honduras, Jordan, Mozambique, and Poland. In some of these countries—particularly the low-income and smaller middle-income economies—progress has been relatively slow in reaching understandings on restructuring terms.
|Agreement classified by month of signature1|
Chile: January, June, and November
Sierra Leone: January
Guyana: January, July (deferment)
Nicaragua: February (deferment)
Mexico: April (new financing only)
Sudan: April (modification of 1981 agreement)
Zaïre: June (deferment)
|Côte d’lvoire: March2|
Mexico: March. August
Costa Rica: May2
Zaïre: May (deferment)
Guvana: July (deferment)
Sudan: October (modification of 1981 agreement)
Madagascar: December (modification of 1984 agreement)
|Dominican Republic: February|
South Africa: March (standstill)
Zaïre: May (deferment)
Côte d’lvoire: December
|South Africa: March|
Mexico: March (public sector debt)2, August (private sector debt)
Zaïre: May (deferment)
Madagascar: June (modification of 1985 agreement)
Romania: September (modification of 1986 agreement)
Bolivia: November (amendment to 1981 agreement)
Ecuador: November (modification of 1985 agreement)2,3
|Gambia, The: February|
Chile: August (amendment to 1987 agreement)3
Uruguay: March (modification of 1986 agreement)
Côte d’lvoire: April2,3
Zaïre: June (deferment)
Poland: June (deferment)3
Poland: July (deferment)3
Trinidad and Tobago: December
Bulgaria: April (standstill)3
Costa Rica: May
Chile: December (amendments to previous agreements)
While the group of countries negotiating bank packages is relatively heterogeneous in terms of commercial bank relations (even if an income-based focus is adopted, as illustrated in Chapter V), three main trends may be highlighted:
(1) Banks appear to be insisting more firmly on addressing interest arrears problems, particularly of middle-income developing countries, prior to negotiation on comprehensive debt restructuring. In the case of Brazil, this was reflected in an agreement reached in May 1991, which included a partial payment of accumulated interest arrears and conversion of the remaining portion into bonds. The agreement provides for cash payment of 25 percent of the arrears accumulated by the end of 1990, with a cap of $2 billion on such cash payments. A portion of the cash payment was made up front at the time of agreement in principle on the term sheet. The remaining cash payment is to be made through monthly installments, which began in July 1991, or in full at the time of agreement on the term sheet for the restructuring of medium-term debt. Agreement on this second term sheet will also allow for the conversion of the remaining portion of the interest arrears into 10–year bonds (with 3 years grace).
(2) There are some indications of a lessening of banks’ reluctance to agree to high-discount debt reduction operations for low-income countries. While such countries account for a small portion of bank portfolios, banks had earlier appeared to be concerned that such agreements would create precedents for other countries. The Niger debt reduction package, completed earlier this year, is expected to be followed by one for Mozambique centered on a buy-back of the bulk of eligible debt. As in the case of Niger, debt reduction operations are to be financed partially through the Debt Reduction Facility of the World Bank’s International Development Association (IDA) and grants from bilateral donors.
(3) The ability of some countries to negotiate comprehensive “one-shot” restructuring packages continues to be hindered by high and mounting interest arrears, low international reserves, and limited access to funding for debt- and debt-service reduction operations. In some of these cases, the situation has been complicated by records of weak policy implementation. Against this background, a number of countries have attempted to adopt a phased approach, with the initial focus on banks’ implicit or explicit acquiescence to interest arrears. This has been combined, in some cases, with partial cash payments and a degree of debt reduction through debt conversion schemes. Country experiences in this area have varied; they include the negotiation by Bulgaria of quarterly payments deferral agreements, a “goodwill payment” (of $95 million) by Poland on accumulated interest arrears, and debt-equity operations by Argentina in the context of a privatization program, accompanied by partial interest payments.
Recent adaptations in procedures of the Inter-American Development Bank (IDB) have expanded the sources of multilateral financing available to support bank debt- and debt-service reduction operations. New guidelines specify that, over a three-year period ending December 31, 1993: (1) up to 25 percent of the IDB’s fast-disbursing sector lending program to a member country may be set aside to finance debt reduction, or, when the IDB is concentrating its support on project lending, about 10 percent of the bank’s overall lending program to that country may be set aside to finance debt reduction; and (2) funds of up to 15 percent of the IDB’s overall lending program to a country may be used to provide interest support. In order to qualify for financing under this facility, a borrower must have an adequate medium-term economic policy framework or structural adjustment program. It must also have a viable medium-term external financing plan, including debt and debt-service reduction, that represents an efficient use of IDB resources and offers reasonable prospects that the reduction will enhance the country’s growth and development outlook.
Debt Conversion Programs
The estimated face value of commercial bank debt converted under the main official conversion schemes (excluding the discount and par bond exchanges undertaken in the context of comprehensive bank packages) rose from $7.2 billion in 1989 to $10.5 billion in 1990 (Table 7). The increase reflected $7 billion retired by Argentina, in connection with the privatization of Entel (the telephone company) and Aerolineas Argentinas (the national airline), which offset reduced activities in several other countries. As in previous years, Chile continued to account for an important share of the conversions, although at a declining rate consistent with a reduction in available bank claims and an increase in secondary market prices. Partial data for the first quarter of 1991 point to a slowdown in the rate of debt conversions, most noticeably in Argentina and Chile, but an increase was recorded for the Philippines as a result of more frequent auctions under its debt-equity program. Finally, there are growing indications of a forthcoming increase in debt conversion activities, mainly as a result of privatization-linked debt-equity swaps, but also owing to various other debt conversion programs (for example, debt-for-nature, debt-for-education, and so on).
Developments in Selected Countries
In April 1991, the Chilean authorities relaxed the repatriation regulations governing the sale of investments acquired through debt conversion programs covered by Chapter XIX of the country’s foreign exchange regulations (Table A16).7 Specifically, the new rules allow investors to repatriate capital after three years—instead of the previous ten years—thereby aligning the minimum holding period with that required for foreign direct investment.8 This change, which effectively increases the liquidity of investments obtained through the Chapter XIX debt conversion route, offsets to some extent the impact of a growing scarcity of Chilean debt paper and a narrowing of secondary market discounts.
Further auctions have been held under the debt conversion program of the Philippines. The second-quarter auction, held in April 1991, retired $75 million in claims (face value), after $138 million was tendered. Successful bids carried discounts ranging from 52 percent to 53.75 percent. In the previous auction, held in February 1991, the authorities reported tenders of $420 million, with successful bids having discounts of 51.75 percent to 54.75 percent. A third auction was held in August 1991.
In Mexico, it appears that only a small portion of the “conversion rights” awarded in the two auctions held last year have been exercised to date. These auctions affected $3.5 billion (original face value) of bank claims and resulted in $1.7 billion of swap rights being awarded at an average discount of 52 percent. Successful bidders were required to deposit claims equivalent to 5 percent of the rights acquired, with the remainder to be paid within 18 months. Other recent debt conversion activities include an April 1991 $3 million “debt-for-scholarship” swap signed with Harvard University, and a debt-for-nature program of up to $300 million annually to be partially financed by the Inter-American Development Bank.
In Venezuela, the authorities have approved aluminum projects of $1.2 billion to be funded up to 30 percent through debt conversion operations. This follows the December 1990 approval of nine petrochemical projects involving a total investment of $2.6 billion, of which $0.6 billion may be funded through debt swaps. Major debt conversion programs currently in the pipeline include debt-for-share swaps in Brazilian companies being privatized and a new debt-for-equity scheme in Uruguay.
The recent period has also witnessed a growth in debt conversions initiated by international agencies and relief organizations, a development covered more fully in Chapter V in the context of low-income countries. Although still relatively small in magnitude, such conversions are becoming more widespread. Agencies typically obtain secondary market bank claims and convert them into local currency to finance a particular activity. In the case of UNICEF, for example, debt is obtained from banks and retired on the condition that the beneficiary debtor government contributes an agreed amount in local currency (involving a discount from the face value of the debt) to be used for a UNICEF development program for children. UNICEF acquires the debt through direct donations by banks or through purchases financed by grants from industrial countries.
A broadly similar mechanism is also being used by environmental agencies in the context of debt-for-nature swaps. Earlier in the year, for example, the World Wildlife Fund and Conservation International obtained commitments for up to $6 million of debt (face value) from a U.S. bank to fund conservation activities in Mexico and Ecuador. Similar operations have taken place in several other countries including Bolivia, Costa Rica, the Dominican Republic, Madagascar, Nigeria, Panama, the Philippines, Paraguay, Sudan, and Zambia. A comparable scheme, although involving the use of official bilateral debt, is being formulated in Poland.9 The impact of these operations varies according to program designs and implementation procedures. The net benefits depend on the cost-effectiveness of the debt conversions, total nature-related budgetary spending, and consistency with overall macroeconomic policies.
Secondary Market for Bank Claims
During the second half of 1990 and early 1991, secondary market prices for bank claims on developing countries were strongly influenced by a number of market shocks that affected the financial position of claim holders. These included Iraq’s invasion of Kuwait in August 1990 and subsequent “distress sales” by some Middle Eastern banks of developing country claims; attempts by traders to reduce trading portfolios in anticipation of further sales by some banks as the Middle East crisis deepened; and rationalization by some Japanese banks of loan portfolios in light of tightening capital-asset constraints and falling equity prices in Japan.
In contrast, since early 1991, the debt situation has not been marked by any major changes in the financial conditions of the main institutional participants in the secondary market. Accordingly, price developments have tended to reflect primarily changing circumstances in debtor countries. Most evident is the sharp narrowing in discounts on bank claims on countries that have regained access to voluntary capital market financing.
Discounts on claims on Chile, Mexico, and Venezuela have narrowed substantially during 1991, accounting for a significant improvement in average discounts for the group of 15 heavily indebted countries (Chart 4). The average price for bank claims on these 15 countries has increased by some 34 percent since the start of the year, with the end-September level being the highest since July 1987. Chilean claims are now trading at a price of about 90 cents on the dollar, in line with that observed for a number of developing countries that have avoided debt-servicing problems. The average discount on Mexican claims (“stripped,” so as to reflect the Mexican country risk element)10 has narrowed by about 17 percentage points, with a particularly strong rise in the price for fixed interest par bonds as a result of the reduction in LIBOR rates. The discount on Venezuelan instruments, also adjusted to reflect country risk, has recorded a similar movement. Specifically, the discount narrowed by some 20 percentage points through September 1991, with comparable changes in the relative prices of the bond instruments.
Chart 4.Secondary Market Prices for Developing Country Loans
Source: Salomon Brothers.
Other highly indebted countries experiencing substantial narrowing in discounts in the first three quarters of 1991—largely in response to market perceptions of improved economic and financial prospects—include Argentina (also aided by expectations of further privatization-linked debt-equity conversions), Brazil (reflecting as well the agreement on arrears), Colombia, the Dominican Republic, Morocco, Panama, Peru, and the Philippines.
Institutional Market Developments
The secondary market for bank claims has grown steadily in recent years. The nominal value of debt traded is estimated to have increased from less than $5 billion in 1985 to $70 billion in 1990. Several market participants are projecting a further rise to about $200 billion for 1991 as a whole. At the same time, market instruments have expanded, with the major impetus provided by recent bank financing packages that involved various collateralized bond conversion options. These developments have been accompanied by institutional changes, including the formation in December 1990 of an “LDC Traders Association,” aimed at increasing market efficiency through standardizing documentation and trading practices.
In August 1991, a new “global index” of developing country debt instruments was launched by the F.P. Consult Company of France, as the prelude to standardized futures and options trading. Contracts for the standardized derivative products are to be cleared by a Swedish Exchange and Clearing House (OM Clearing) and are expected to provide greater depth to the underlying market.
Based on data compiled for the Fund’s international banking statistics. Reported changes in bank claims reflect, in some cases, adjustments to banks’ balance sheets that are not directly related to flows. These include debt write-offs and conversions, capitalization of accumulated interest arrears, and exercises of official guarantees.
After taking into account claims held by banks but guaranteed by other agencies.
Described in IMF (1991).
In March 1991, Nigeria reached preliminary agreement with its bank creditors on a financing package incorporating debt and debt-service reduction through a cash buy-back and a collateralized bond exchange. Finalization of this agreement had been delayed by differences over the form of principal collateral for the bond exchange. These differences were resolved in late September. The agreement includes three financing options affecting $5.8 billion of eligible debt: (1) a buy-back at a price to be announced by the authorities (subsequently set at 40 cents); (2) an exchange of debt for registered bonds carrying a fixed interest rate of 5 ½percent for the first three years and 6¼ percent thereafter, repayable in one installment in November 2020, with fully collateralized principal and a 12-month interest guarantee; and (3) a new money option involving the exchange of existing debt for bonds carrying an interest rate of LIBOR plus
On August 30, 1991, the Philippines reached a preliminary agreement with its bank creditors on a financing package incorporating new money facilities and two reduced interest par bond conversions. The “temporary interest reduction bonds” would carry a 15-year maturity (including a 7-year grace period) and interest rates rising from 4 percent in the first year to 6 percent in the sixth year, and LIBOR plus
Official debt-equity conversions with remittance rights are covered by Chapter XIX, which allows investors to convert debt into domestic currency to finance equity purchases. Other conversions without remittance rights are carried out under Chapter XVIII, which allows exchanges on the basis of the repatriation of foreign assets of Chilean residents and foreign exchange acquired on the parallel market.
Investors will be required, however, to pay compensation to the central bank on a sliding scale linked to the time the investment is held and the discount obtained through the debt conversion.
This would involve converting up to 10 percent of outstanding official bilateral debt to Paris Club creditors into local currency proceeds. The proceeds would be placed in a $3 billion fund to finance environmental projects.
The reported market prices for bank claims on Mexico and Venezuela have been adjusted, or stripped, to exclude the collateralization of principal and interest on the discount and the reduced interest bonds acquired in exchange for the old debt. Movements in such stripped prices thus reflect changes in the underlying market perceptions of country risk. The increases in these measures of country risk are more pronounced than for the composite instruments, since the latter incorporate the relatively stable value of the principal and interest collaterals. With regard to absolute price levels, the stripped Mexican and Venezuelan prices have been rebased to ensure, among other things, continuity with price developments for the (totally uncollateralized) bank debt instruments that preceded U.S. Treasury Secretary Nicholas Brady’s debt initiative.