Moody’s downgrades Vale debt to Baa3

Moody's Investors Service said it downgraded the senior unsecured ratings on the foreign currency debt issues of Vale SA and Vale Overseas Ltd. (guaranteed by Vale) to Baa3 from Baa2.

The agency also downgraded the senior unsecured ratings of Vale Canada Ltd. (not guaranteed by Vale) to Baa3.

The outlook remains negative.

Moody’s said the downgrade reflects its expectation of weaker performance over the next 12 to 18 months resulting from the substantial decline in iron ore and base metals prices observed to date in 2015 and the expectation that prices will not likely experience any meaningful recovery before 2017.

As a consequence, Vale's revenues and cash flows will continue to drop and credit metrics, particularly leverage, will remain challenged, and likely trending toward 5 times to 6 times (incorporating Moody's standard adjustments).

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