With these, previous debt was settled in a way that could give new investors confidence that their debts would be honoured. Not only did the Brady bonds settle the longstanding debt problems from the 1982 crisis, but they also signalled that the authorities in the capital-exporting countries (particularly the United States) might help to sort out problems when they arrived.
This would have given institutional investors some comfort. One reason often cited to explain the increase in capital flows in the 1990s was the reduction in various forms of capital controls in the emerging countries.