Brady Bonds

  

Categories: Bonds, Muni Bonds

These are bonds issued by the governments of developing countries. Countries issue them to reduce their country's debt. The bonds were named after Nicholas Brady, the treasury secretary in the '80s who used them to try and help Latin American countries that had lots of debt. These babies were denominated in U.S. dollars and backed by the U.S. Treasury, which made them pretty attractive to investors.

And no, a mutual fund holding only Brady bonds is not called a "Brady Bunch." Nice try, though, Chuckles.

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Finance: What are Government Bonds?52 Views

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finance a la shmoop. what are government bonds?

00:05

now we're gonna narrow this question a bit and declare these bonds to be US [hands shape the question]

00:09

government bonds. our answer would be a tad different if we were discussing

00:12

bonds backed by North Korea Nigeria or Egypt so US government bonds come in a

00:19

few flavours. generally speaking they range in duration that is how long it

00:24

takes for them to mature and the principal get paid off. short-term US

00:28

government paper it's a fancy term for a bond ,refers to things that come due in a

00:33

year or less. that's short-term. year or less. and then there are Treasury bills

00:37

which come in a variety of durations and our price like this note how different

00:42

these look versus just you know buying a bond .but when you buy a bond it has a [chart shows prices]

00:46

face amount of say a thousand bucks for what is called its par value. that piece

00:52

of paper might agree that clown shoes incorporated which is where most

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congressmen get their Footwear of course, will pay 30 bucks twice a year to the

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holder for 10 years, and then pay back the original thousand bucks invested

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it's like a normal vanilla bond, the interest rate here in this case is 6%

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per year, but many US government notes are sold at auction which means they

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sell at a discount to their par value. well regardless of how they're sold US [auction with a clown in attendance]

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government bonds are backed by what is generally perceived in the world as the

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most certain or secure financial backing. even more powerful than Google .if sorry

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Larry and Sergey we're just keeping it real. the bonds are backed specifically

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by the US government's right to tax its citizens. and oh they tax us. do they ever.

01:38

so now you can stop wondering about that bottomless hole a third or more of every

01:43

paycheck vanishes into. [portion of paycheck flies down dark hole in the ground]

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