Despite the fact that political risk insurance (PRI) transactions have gained increasing popularity south of the border, Fitch Ratings announced in a report last week that the future-flow structure, the old favorite, is still the best bet.

While PRI provides a great deal of value to any transaction, Fitch said it cannot mitigate all fundamental credit risks. "Future flow transactions are better than PRI transactions because PRI doesn't insulate investors from a variety of sovereign risks that future flow transactions do," said Greg Kabance, an analyst with Fitch. "This is very apparent in Argentina, where future flow deals are performing while other transactions are not and banks and state-owned companies are highly susceptible to sovereign risks such as devaluations or interference in payment mechanisms causing deals to default."

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