Fitch affirms Samarco

Fitch Ratings said it affirmed the BBB foreign- and local-currency issuer default ratings of Samarco Mineracao SA as well as its AA+(bra) national rating. The outlook is stable.

The agency said the company's ratings are supported by its joint ownership profile by two industry leaders, Vale SA (BBB+) and BHP Billiton plc (A+); its strong profitability; and its position as a low-cost producer of iron ore pellets, which helps it remain competitive during difficult trading conditions.

Samarco has a track record of low leverage, Fitch said. For the last 12 months ended June 30, the company had a total debt-to-EBITDA ratio of 1.0 times and a net debt-to-EBITDA ratio of 0.95 times. The agency noted that leverage is expected to increase over the next two years as a result of capital expenditures. Fitch expects the net debt-to-EBITDA ratio to increase to around 1.7 times for 2012 and 2.2 times in 2013.

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