In the past several weeks, two Latin American issuers have hit the market with letter of credit-backed CP programs.

Banco Continental de Panama floated a US$140 million program in a single issue during early June. Structured by Hypo-und-Vereinsbank, the transaction went to nearly 20 banks, according to a source familiar with the deal. The New York branch of Credit Lyonnais provided a letter of credit, garnering the program a P-1 from Moody's Investors Service. The deal renewed an existing facility.

Emerging market issuers holding less-than-stellar ratings can only gain entry to the U.S. CP market by securing some kind of guarantee. "They don't get done in the CP market unless they're structured that way," said Sam Pilcer, managing director in the structured finance group and head of ABCP at Moody's.

Proceeds from the Continental deal are being used for trade finance, said a source familiar with the transaction. That may include the purchase of receivables, but not necessarily. The program's requirement's "may have a rigid definition of trade and may even require certification of different trade purposes," the source said.

In late May, Brazilian oil giant Petrobras closed a CP deal sized at US$160 million. With Barclays Capital as both the LOC fronting bank and structurer, the transaction won top-notch ratings. "This helps Petrobras handle a lot of its short-term trade needs," said a source familiar with the transaction. That issuer has been busy on other fronts as well, taking advantage of investors' fading aversion to Brazil (see ASR 5/19, p.19).

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