The Brazilian state of Rio de Janeiro has become
the first in the country to securitise the revenue
from oil royalties. The structure has the potential to be
taken up by other states in Brazil and in jurisdictions with
similar oil revenue structures.
The cross-border offering closed in June and
secured an investment grade rating of BBB- from Fitch. It included a novel feature for
balancing multi-currency issuances to prevent inflation from
causing an imbalance to the pari passu note holders. The deal
also accounted for risk factors that included the possibility
of changes to the state's oil revenue.
The deal is an opportunity for Rio to diversify its sources
for capital and liquidity while supporting the state pension
fund which relies on the royalty proceeds to meet its...