Moody's cuts CVRD Finance, Vale Overseas notes to Baa3

Moody's Investors Service said it downgraded to Baa3 from Baa1 the global foreign-currency ratings on CVRD Finance Ltd.'s series 2000-1 and 2000-3 notes and Vale Overseas Ltd.'s enhanced guaranteed notes due 2007.

The downgrade follows Moody's downgrade of Brazil-based parent company Companhia Vale de Rio Doce's global local-currency issuer to Baa3 from Baa1 and concludes Moody's review of the notes that began on Aug. 11.

CVRD Finance's notes are supported by cash flows generated by sales of iron ore and pellets by CVRD Overseas, an indirect wholly owned subsidiary of Companhia Vale do Rio Doce. The agency said that as in most future flow transactions, the rating of the notes is in part based on the operational and financial strength of the originator of the future receivables, Companhia Vale do Rio Doce.

The enhanced notes issued by Vale Overseas are rated based on the ability and willingness of Vale de Rio Doce to make payments in Brazilian reais to investors for conversion into dollars under the terms of the transaction documents, Moody's said.

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