The coverage offers developing countries, who issue debt securities, the possibility to acquire insurance coverage to protect “against currency inconvertibility and currency nontransfer risks in the country of the issuer.” This in turn means the securities will be more highly rated, and therefore more easily placeable and at less cost in the world’s capital markets.
Commenting on the announcement, Sovereign’s President and CEO, Price Lowenstein, stated: “By adding our political risk coverage to the structure of bond offerings and removing the currency inconvertibility and currency nontransfer risks, many emerging market issuers will now be able to obtain an investment grade rating, regardmless of the rating of the issuer’s country.”
Coverage limits are $125 million per project with up to a 15 year period of coverage. Sovereign, formed in 1997, already has a portfolio which exceeds $3 billion in coverage in over 60 emerging markets.
They can be contacted over the Internet at : www.sovereignbermuda.com for further information.
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