S&P rates Vale notes BBB+

Standard & Poor's said it assigned a BBB+ rating to the forthcoming guaranteed notes to be issued by Vale Overseas Ltd., a wholly owned subsidiary of Vale SA. (BBB+/stable). The company expects to issue up to $1 billion in notes due in 2020.

The rating on the notes reflects the credit quality of Vale, which irrevocably and unconditionally guarantees the notes. The notes will rank equal to Vale's other unsecured and unsubordinated debts.

"The rating on Vale SA reflects the company's strong business profile, characterized by its leading position in seaborne iron ore and a favorable one in nickel," S&P analyst Milena Zaniboni said in a statement.

Other factors include the company's improved geographic and product diversification and a competitive cost structure in most metal commodities the company produces, the agency said.

These positives are partly offset by the risks associated with industry cyclicality, the company's acquisitive business strategy and robust dividend distribution, and some dependence on China's economic performance, the agency noted.

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