Brady bonds are an investment backed by foreign governments that have restructured and/or financed a quantity of their national debt through the issuance of Brady bonds. The countries that have issued Brady bonds include several central and South American countries and a few countries located in Europe, Africa and Asia. Some of these bonds can no longer be purchased because issuer countries later repurchased them to improve their financial positioning.

Brady bonds are a part of national capital restructuring. In some cases a portion of a country's debt is forgiven in exchange for repayment in the form of bonds. In other cases, the bonds are exchanged as collateral for new financing from foreign banks. These bonds have maturity dates up to 30 years in the future, by which the full value of the bond plus interest is repaid. In the 1990's, several types of Brady bonds were issued. The value of these bonds differed depending on whether they were exchanged at a discount, face value, and/or with certain requirements such as floating or fixed rates of interest. In some cases the interest of these bonds is backed by collateral while in other instances it is not.

Brady bonds trade in secondary international debt markets and are purchased through financial institutions that trade in foreign debt instruments. Due to the affiliation of these bonds with national debt, foreign governments and international banks are more likely to invest in these types of bonds than individuals. However, Brady bonds are available to investors worldwide through brokers who specialize in emerging market debt.

Brady bonds typically have high yields in the upper single digits and are sometimes issued in U.S. dollar denominations to protect their value from high inflation. There are also a variety of Brady bonds such as C-Bonds which have a fixed interest rate, and discount bonds which have been exchanged for a higher amount of debt. Should the debtor nation be in strong financial condition as is the case with Brazil, bonds such as C-Bonds can present a more secure investment due to the higher likelihood interest and principal will be paid. In the case of Brazilian C-bonds, these were all bought back by the Brazilian Government in 2004.

In October of 2007, the New York Times reported the Government of Ecuador would not immediately pay interest owed on its Brady bonds. Similarly, other countries that experience economic difficulties may also postpone or default on Brady bond interest payments. This suggests the financial condition of the issuing country presents a risk factor in the purchasing of such bonds.

• Foreign Economy: Assess the economies general health by studying inflation rates, historical GDP growth, economic forecasts and national credibility.
• Locate a knowledgeable broker and/or investment bank who can assist in identifying the Brady bonds with the best rates, collateralization and chance of repayment.
• Diversify: Due to the risk associated with this type of investment, it may be wise to only invest a percentage of one's investment in such an investment vehicle.
  
  The Brady bond market has declined as a percentage of over all international debt market investments because of national buy back programs and a rise in other types of foreign investment vehicles such as regular bonds. A contributing factor to this decline in the Brady bond market has been due to Mexico's and Brazil's buy back programs. Brady bonds present a certain risk, specifically that associated with the government and economy which the bond's leverage. Foreign governments have the capacity to restructure debt at terms less favorable to investors in past debt. Also, if the foreign economy is unstable or weak, an increased possibility of default or delayed payment of the bond's interest emerges. Nevertheless, Brady bonds do present investors, whether they be large banks or foreign governments, the opportunity to invest in foreign economies and at a considerable percentage yield.