Moody’s revises Vale outlook to stable

Moody's Investors Service said it changed the rating outlook for Vale SA and related ratings to stable from positive.

At the same time, the agency affirmed Vale's Baa2 senior unsecured rating, provisional Baa2 senior unsecured rating under its well known seasoned issuer shelf registration and the Baa2 ratings on the foreign currency debt issues of Vale Overseas Ltd. (guaranteed by Vale) as well as Vale Overseas Ltd.'s provisional Baa2 senior unsecured shelf rating.

Moody's also affirmed the Baa2 senior unsecured ratings of Vale Canada Ltd. (not guaranteed by Vale).

Simultaneously, Moody's America Latina affirmed Vale's Baa2 global scale local currency issuer rating and Aaa.br national scale rating, as well as the Baa2 global scale local currency rating and Aaa.br national scale rating on Vale's R$750 million senior unsecured notes.

According to the agency, the affirmations and change in outlook reflect its view that Vale’s credit profile and operations remain solid but incorporate the deterioration in market fundamentals for iron ore and base metals, pressuring commodity prices in a period in which Vale is undergoing a large expansion phase with substantial capital expenditures.

Although the company is well positioned to tolerate a lower price environment, the increase in volumes and ore grades resulting from ongoing investments will partially offset low commodity prices and will not be fully reflected in the company's credit metrics until 2017-2018, Moody’s said.

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