DBRS assigns BBB (low) to Vale notes

DBRS said it assigned a provisional rating of BBB (low) with a negative trend to the proposed $1 billion long-term notes to be issued by Vale Overseas Ltd. in the U.S. capital markets.

Vale Overseas intends to use the net proceeds to pay part of the redemption price of the 6¼% notes due in 2017, issued by Vale Overseas and guaranteed by Vale SA, which mature in January 2017, and to pay the balance of such redemption price using available cash. Vale plans to issue a notice of redemption promptly after the closing of the new note offering and to redeem, 30 days thereafter, the entire $1.25 billion outstanding amount of 6¼% notes.

The notes will be irrevocably and unconditionally guaranteed by Vale. The rights of holders to payment under the guaranty will be: (a) Junior to the rights of holders of secured debt of Vale that amounted to $477 million as of June 30; (b) equal with the rights of creditors under all of Vale’s other unsecured and unsubordinated debt; and (c) effectively subordinated to the rights of any creditor of a subsidiary of Vale over the assets of that subsidiary, DBRS said.

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