Ecuador defaulted Tuesday on its "Brady bond" debt, the first country to do so since the program was launched in the early 1990s.

Brady bonds were first issued during a Mexican financial crisis. Under the program, named for Nicholas Brady, secretary of the Treasury in the Bush administration, the foreign-government-issued bonds are collateralized with zero-coupon U.S. government securities. The aim of the bonds was to enable countries in financial difficulty to raise money in world capital markets. Ecuador, along with most other Latin American countries, issued the bonds in exchange for bank loans on which it had defaulted.

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