Following in the footsteps of the recent $300 million Petrobras transaction, Brazil-based Comphania Vale do Rio Doce (CVRD), the largest global producer and exporter of iron ore in the steel industry, is in the market with a $300 million transaction that features similar letter-of-credit political risk coverage.

JPMorgan will lead the deal, a first of its kind for CVRD. The bonds will be backed with a letter of credit from BBVA, which guarantees coupon payments in the event of inconvertibility. Traditionally, political risk insurance signifies that an insurance company will step in to pay creditors if the government were to impose foreign-exchange controls interfering with debt payments.

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