The Brazilian asset class known as precatorios made its debut earlier this year in a receivable investment fund (FIDC) called Polo, which included a foreign investor among the buyers, according to an issuance document.

Whether overseas funds or banks will even approach future precatorio-backed deals will depend on the strength of the structures, sources said. Another catalyst will be just how deep the hunger for yield runs among the foreign investors most apt to look at domestic Brazilian product. Interest in one deal won't necessarily have knock-on effects for others in this asset class, as precatorios are far from homogeneous. While the single closed transaction was deemed on par with sovereign risk by Standard & Poor's, because of the asset class's diversity, transactions can be - and an upcoming one already has been - rated much lower.

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