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Vale Agrees to Buy Back ~$3.1bn in its Participating Perpetual Debentures
October 7, 2025
Brazilian mining giant Vale has agreed to repurchase the entirety of its participating debentures which are a unique type of perpetual bonds that date back to its privatization in 1997. The buyback is driven by the fact that these securities have become increasingly costly for the major iron ore and nickel producer. Vale is offering BRL 42 ($7.89) per debenture. With approximately 388.6mn in notes outstanding, the transaction could reach $3.1bn if all holders accept. The company anticipates that the move will help save on debt costs, as the notes currently yield an estimated 13% in dollars, which is higher than the 6.1% yield on Vale’s standard dollar bonds, as per Bloomberg.The perpetual debentures do not have a fixed coupon. Instead, they pay a dividend based on a percentage — 1.8% of net revenue from specific iron-ore sales and 2.5% of net revenue from copper and gold production after certain production thresholds are met. As per Bloomberg, the notes recently became more expensive for Vale after a key output threshold in southeastern Brazil was met earlier this year, triggering higher revenue-based payments.
Vale’s dollar bonds were trading stable, with its 3.75% 2030s at 96.2, yielding 4.64%.
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