Moody's gives Baa2 to Vale notes

Moody's Investors Service said it assigned a Baa2 senior unsecured foreign-currency rating to the notes due September 2020 issued by Vale Overseas Ltd.

The agency also assigned a Baa2 senior unsecured foreign-currency rating to Vale's notes issued under the reopening of the company's 6.875% $1 billion note issue due 2039. Both issues are guaranteed by Vale SA.

Moody's affirmed Vale's Baa2 global local-currency rating, its Aaa.br Brazilian national scale rating and the Baa2 ratings on the foreign-currency debt issues of Vale Overseas (guaranteed by Vale) as well as the Baa2 senior unsecured ratings of Vale Inco.

The outlook is stable.

Proceeds will be used for general corporate purposes.

Vale's Baa2 global local-currency rating reflects the company's diversified product base, strong coverage ratios, competitive cost position and substantive portfolio of long-lived assets, according to the agency.

The rating also considers the ability of the company to perform well, given its asset base, in a down market environment and maintain ratios generally in line with its rating, the agency said.

However, the rating considers the challenges that will continue to impact the company's operating cost profile, particularly as volumes increase and prices of key input materials rise, the agency noted.

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