Moody's downgrades Vale

Moody’s Investors Service said it downgraded the rating for Vale SA and related ratings to Ba3 from Baa3, including Vale’s senior unsecured rating and the ratings on the foreign currency debt issues of Vale Overseas Ltd., which are guaranteed by Vale.

Moody's also downgraded to B2 from Baa3 the senior unsecured ratings of Vale Canada Ltd. (not guaranteed by Vale). The outlook is negative.

At the same time, Moody's América Latina downgraded Vale’s ratings to Ba3 from Baa3 in the global scale local currency and to A3.br from Aa1.br in the national scale rating and the ratings assigned to the senior unsecured notes (Debentures de Infraestrutura) issued by Vale SA.

At the same time, Moody’s has withdrawn Vale SA’s issuer rating and assigned a Ba3 corporate family rating.

Moody’s said the downgrade of Vale’s ratings to Ba3 reflects the agency’s expectation of weaker performance over the next 12 months resulting from the substantial decline in iron ore and base metals prices observed in 2015 and Moody’s expectation that prices will not likely experience any meaningful recovery before 2017.

The rating action also incorporates Moody’s view that there has been a fundamental downward shift in the mining sector with the downturn being deeper and prospects for a recovery extended, resulting in increased credit risk and weaker metrics for Vale as well as the global mining sector.

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