Following months of an issuance dry spell touched off by Brazilian elections in October, Banco do Brasil closed a US$120 securitization of future electronic money transfers on March 17. Banco do Brasil was also the last the Brazilian bank to place a securitization before investors froze out issuers from the Latin American giant. Respectively rated Baa1'/ BBB' by Moody's Investor Service and Standard & Poors, the deal priced at 450 basis points over Treasurys, slightly tight to the 475 basis point spread of the prior US$40 million deal. That deal carried the same rating and was placed in September via ING Barings.

Merrill Lynch and BdB Securities were co-leads on the latest transaction, which was privately placed. The transaction's ratings broke through the sovereign ceiling, thanks in part to the demonstrated resilience of the Brazilian Bank's remittance business and the high ratio of future flows to the scheduled debt service.

The fact that the transaction emerged unwrapped may be proof of limited guaranty supply in Brazil. XL and Ambac remain aloof from the country's risk, sources said. MBIA is the only insurer who has said that it is not tapped out in the country. Other insurers are eyeing Brazil as well, sources said. Yet given that pricing proved tighter than some had expected, sources say other Brazilian issuers may decide to cross the border naked.

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