Even though the cross-border market is bracing for a sizable deal from Gazprom (see p.1), issuance has slowed a bit from June. So far this quarter, a single Emerging Market deal has priced. Earlier this month, Banco Itau issued a US$105 million, seven-year transaction backed by diversified payment rights via Merill Lynch.

The transaction came off an existing program. As such, it echoed previous DPR deals from Itau, except that this time flows through recently acquired Banco BBA were folded into the structure.

The inclusion was necessary in order to maintain the transaction's creditworthiness, a source said. "If it wanted to, the bank could have diverted flows through BBA, since they're both distinct operating banks," said a source familiar with the deal. BBA "needed to be included to head off any chance of that," he added.

Rated triple-B by Fitch Ratings and Standard & Poor's and Baa1 by Moody's Investors Service, the deal priced at 165 basis points over six-month Libor. High-grade investors were the principal buyers. Linklaters and Tozzini, Freire, Teixeira & Silva advised the issuer for cross-border and domestic law, respectively. Dewey Ballantine counseled Merrill.

Copyright 2004 Thomson Media Inc. All Rights Reserved.

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