S&P lifts Vale to positive

S&P said it revised the outlook on Vale SA to positive from stable.

The agency also said it affirmed the BBB- global-scale corporate credit and issue-level ratings on bonds issued through Vale Canada Ltd., Vale Overseas Ltd. and PT Vale Indonesia Tbk.

S&P also said it affirmed the brAAA Brazilian national-scale rating on Vale.

The outlooks on the national-scale credit ratings remain stable.

Vale's credit quality is improving rapidly due mainly to supportive iron ore prices and management actions to contain the company's leverage, S&P explained.

The agency also said it still expects iron ore prices to dip slightly this year, but given their very strong levels during the past six months, it believes Vale could reduce its adjusted debt by $8 billion to $10 billion by the end of 2017.

Such a drop would represent 20% to 25% of adjusted debt as of Dec. 31, 2016, S&P said.

A markedly lower debt position could pave the way for an upgrade because it would reduce vulnerability to price downturns, compensating for the inherent volatility of Vale's cash flows, the agency said.

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