First it was for Petrobras, now it's for Banco Itau - once again, Moody's Investors Service is center stage under the controversial spotlight for assigning a high rating to a transaction sporting political risk insurance.

Brazil-based Banco Itau is set to issue $300 million of subordinated notes through its Grand Cayman branch. Moody's has assigned an A3 rating to the notes as a result of the 18 months of political risk insurance provided by Sovereign Risk Insurance Ltd. According to sources at Moody's the rating is not only a result of the political risk insurance, but it also reflects the strength of the Brazilian bank, which currently has an A2 local currency issuer rating.

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