S&P: Vale Overseas bond BBB-

S&P said it assigned a BBB- rating to Vale Overseas Ltd.'s proposed senior unsecured bond, which is fully guaranteed by Vale SA.

The bonds will rank equally to Vale Overseas’ other senior unsecured debt, the agency said, and the guarantee will rank equally in right of payment with Vales' other unsecured and unsubordinated debt obligations.

The proceeds will be used for debt refinancing, S&P said.

The ratings and negative outlook reflects the financial obligations from the agreement signed with Brazilian Authorities for the remediation efforts following the dam failure at its joint venture, Samarco Mineracao SA, the agency explained.

The ratings also consider the uncertainties around the Samarco Mineracao’s resumption of operations, S&P said, and pressures on Vale's free cash flow generation due to its considerable investment program amid volatile iron ore prices.

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