After falling out with more than a few buyside circles, political risk insurance (PRI) is back. Five bond deals since mid 2003 come with the policy and more are in the works, according to sources. While all of these are more corporate than ABS in substance, the cast of players - in terms of investors, analysts, and bankers - often overlaps with structured finance.

In early 2003, the prognosis for PRI looked grim. Argentine deals that had the policy attached defaulted anyway, leaving some investors wondering what exactly it was supposed to cover if not a sweeping pesification of the economy. "It's purely a liquidity product," said Brigitte Posch, vice president at Moody's Investors Service. "It basically tells investors that as long as the issuer is able to provide the equivalent debt service in local currency, then the provider will make the debt service payments in dollars."

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