S&P revises Vale view to stable

S&P said it revised the outlook for Vale SA to stable from negative and affirmed its BBB- global scale and brAAA national scale ratings.

“The stable outlook reflects our view that the company will maintain adjusted debt to EBITDA consistently below 2x despite our estimates of higher capex, dividends, and provisions; and potential fines and liabilities related to the accident and safety measures,” S&P said in a press release.

Though Vale has spent nearly $3 billion related to the Brumadinho dam accident, the agency said it estimates the company will invest an added $5 billion in safety measures and potential fines and liabilities.

However, S&P noted strong iron ore prices, a healthy cash position, lower dividends, and capex, resulting in sizable free cash flow generation, which added significant headroom to Vale's balance sheet.

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