Merrill Lynch recently closed a $75.3 million securitization of export receivables for Brazilian refinery OPP Petroquimica S.A. The notes, which were sold to two U.S. bank lenders, have a 3.5-year final maturity and priced at Libor plus 170 basis points. The transaction was marketed as a private placement and was unrated.

The deal is backed by a performance bond from Fireman's Fund Insurance and a contingent off-take agreement from Enron Corp.

"The contingent support makes the deal less susceptible to market conditions," explained Michael Lucente, who heads the Latin America structured finance group at Merrill. "According to the agreement, if OPP fails to export, the performance bond exports or pays cash to the trust on their behalf. And if OPP fails to find a market for its goods it can always sell to Enron. It's an enhancement on both the export and the import sides."

The transaction is OPP's first securitization and a welcome event for the dormant Brazilian ABS market, yet it may not be a harbinger of renewed activity in the region. "The macroeconomic factors are more dominant than the success of this single deal," said Lucente. "But the fact that it was closed at a good level is a good indicator."

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