S&P downgrades Vale

Standard & Poor’s said it lowered the ratings on Vale SA, including its corporate credit ratings to BBB from BBB+ and the ratings on Vale’s bonds issued by Vale Canada Ltd., Vale Overseas Ltd. and PT Vale Indonesia Tbk.

The outlook is negative.

All of the ratings were removed from CreditWatch, where they were placed with negative implications April 13, S&P said.

The agency also said it affirmed the brAAA Brazilian national scale ratings on the company and its debt.

The downgrade reflects the significant pressure that the combined effect of lower iron ore prices and sizable investment levels are expected to have on the company’s leverage in 2015 and 2016, S&P said.

Even though the agency said it continues to expect the leverage to meaningfully drop by 2017 and thereafter, S&P said it currently assumes lower iron ore prices.

The price drops are hurting profitability levels across the industry, affecting the most the lesser diversified producers, such as Vale, the agency said.

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