Three years in the making, the much-anticipated approval from the Brazilian Senate for the Transportadora Brasileira Gasoduto Bolivia-Brasil SA's (TBG) $180 million gas-fee-backed transaction has come a little late, forcing the deal to be reassessed.

The bond issuance will be used to finance the construction of the largest gas pipeline in Latin America that runs more than 3,000 kilometers from Bolivia through Brazil. The gas companies in various cities pay fees for the use of the pipeline and therefore the project will have some economic viability from the rental payments.

The transaction, led by Credit Suisse First Boston, was assigned a triple-B plus rating by Fitch in November and priced in December. The notes have an 18-year term and interest is payable annually.

Since the transaction is based upon a government project, the deal has been awaiting Senate approval for quite some time.

"The Senate just got tied up in some other stuff and it was one of those things that was suppose to come tomorrow and just dragged on and on," said one market source.

Other market sources say that the transaction has been somewhat controversial, though that has not played a role in the delayed senate approval.

The lock-in for pricing expired in June and as a result of the drastic market changes since last November, the deal will return to market.

The transaction features a partial credit guarantee from The World Bank. The rolling guarantee will cover all interest and principal of scheduled payments, and as TBG makes the payments, the guarantee will roll over to the next scheduled payment.

If TBG fails to make the scheduled payment, The World Bank will make the payment and the Brazilian government will indemnify The World Bank for payment. If the reimbursement is not made, it is considered a cross-default on Brazil's World Bank debt.

"Brazil will do everything it can to avoid a default on the World Bank," said an analyst close to the deal. According to Fitch, historically, Brazil has never defaulted on World Bank debt.

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