Sovereign Risk Insurance Ltd. on Friday announced it had issued two political risk insurance policies in connection with a capital markets transaction covering a two-tranche Yen and US Dollar-denominated notes issue by Banco Itau.

The policies were issued in support of an aggregate amount of US$350 million of notes, US$250 million equivalent of which was denominated in Japanese yen.

The notes are general unsecured and unconditional obligations of Banco Itau. Sovereign said the issue was both the first unwrapped A-rated deal and the first subordinated bond offering in Brazil. The ten-year political risk insurance policies cover up to 18 months of interest payments on the notes against the risks of currency inconvertibility and currency nontransfer.

Sovereign president Price Lowenstein said: "We are pleased to have been able to assist Banco Itau in achieving an investment grade rating on this transaction. This marks a further evolution in the use of political risk insurance in the capital markets. The fact that the notes were issued during a turbulent time in the Latin American markets testifies to the acceptance of the use of political risk insurance to enhance capital market issues in emerging markets. We are also extremely pleased to note the large interest in this issue in the Samurai market, which previously has not used political risk insurance.''