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Bond Market News
Vale Upgraded to Baa2 by Moody’s
October 3, 2024
Vale SA has been upgraded by a notch to Baa2 from Baa3 by Moody’s. The upgrade follows Brazil’s sovereign rating upgrade, as Vale’s ratings had been constrained by the credit quality of the sovereign environment, according to Moody’s. Vale is rated two notches above the Brazilian government due to its strong global positions in iron ore and nickel production, as well as cash flows that remain largely insulated from Brazil’s economic conditions. About 90% of Vale’s revenues come from outside Brazil, providing a buffer against domestic macroeconomic and political challenges. While Vale’s revenue heavily relies on iron ore, contributing about 92% of EBITDA, the company is diversifying through planned expansions in nickel and copper. Moody’s maintains a positive outlook on the entity, reflecting expectations of ongoing financial discipline, strong liquidity, and balanced cash flow as Vale expands its base metals segment without significantly increasing debt.
Vale’s bonds traded stable with its 3.75% 2030s at 95.4, yielding 4.67%.
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