Fitch assigns BBB to Vale notes

Fitch Ratings said it assigned a BBB(exp) rating to Vale Overseas Ltd.’s proposed benchmark-size senior unsecured notes due to 2021, which will be unconditionally guaranteed by Vale SA.

Proceeds will be used for general corporate purposes, including liability management.

Fitch currently rates Vale's long-term foreign-currency issuer default ratings at BBB and long-term local-currency issuer default rating at BBB+.

The outlook is negative, which reflects the negative outlook on the sovereign rating.

The investment-grade ratings are supported by Vale's position as the leading producer of low-cost iron ore, the agency said. Vale's 2015 market share in the seaborne iron ore trade was about 22%.

Reinforcing the company's position, is its ongoing production expansion of high grade and low cost iron ore, which should allow it to increase output to more than 430 million tons of annual output by 2018 from roughly 345 million tonnes in 2015.

The main driver of the increase in volumes is the company's S11D project – a $14.3 billion project that will increase the company's annual output by 90 million tons.

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