Oil on Troubled Waters

Oil on Troubled Waters

Last May, the Brazilian national oil company Petrobras had to scrap its plan to sell a $200 million, 15-year bond as the 2002 election campaign warmed up. Not even political risk insurance was enough to tempt investors into the deal. Many investors, burned by their experiences in Argentina, were panicking over the rise of Luiz Inácio Lula de Silva, the Workers Party presidential candidate. A year later, with Lula now installed as president, investors were falling over themselves for slice of a $400 million, five-year bond offering from Petrobras shorn of credit enhancements and risk mitigation features. This was the first time since the 1990s that Petrobras could raise money in the inte

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