DBRS Assigns Provisional BBB (high) Rating with Stable Trend to Vale New Long-Term Debt Issue

DBRS has today assigned a provisional rating of BBB (high) with a Stable trend to the proposed long-term notes (the Vale New Notes) to be issued by Vale S.A. (Vale or the Company) in the U.S. capital markets. Vale intends to use the proceeds for general corporate purposes.

The Vale New Notes will be offered by way of a supplemental prospectus to the Company’s prospectus dated November 3, 2009, and filed with the United States Securities and Exchange Commission (SEC). A preliminary version of the supplementary prospectus was filed with the SEC on September 4, 2012. An application will be made to list the Vale New Notes on the New York Stock Exchange.

In addition, Vale has proposed changes to the covenants in the Vale S.A. base indenture dated March 24, 2010 (Vale Base Indenture), which governs the notes. The amendments to the Vale Base Indenture increase the cross-acceleration amounts, which would constitute an event of default under the Vale New Notes, as well as amending or removing a number of Vale obligations under the Covenants section of the Vale Base Indenture. DBRS views that the amendments proposed to the Vale Base Indenture will not materially change the likelihood of a default occurring on the Vale New Notes relative to Vale’s Senior Unsecured Debt currently rated by DBRS.

The Vale New Notes will be general obligations of Vale and are not secured by any collateral. The rights of holders to payment under the Vale New Notes will be: (1) junior to the rights of secured creditors of Vale to the extent of their interest in Vale’s assets; (2) equal with the rights of creditors under all of Vale’s other unsecured and unsubordinated debt; and (3) effectively subordinated to the rights of any creditor of a subsidiary of Vale over the assets of that subsidiary.

The provisional rating listed above is based on: Vale’s draft of the preliminary prospectus supplement dated September 4, 2012, and related documents; the draft proposed amendments dated August 30, 2012, to the Indenture between Vale S.A., as issuer and The Bank of New York Mellon, as trustee dated March 24, 2010, as amended; Vale’s public disclosure documents, including its Q2 2012 interim report and its 2011 annual report; as well as the current financial structure, business profile, credit metrics and market and business outlook for Vale, as well as other matters. The assignment of final ratings is subject to receipt by DBRS of final documentation that is consistent with that which DBRS has already received.

Notes:
All figures are in U.S. dollars unless otherwise noted.

The applicable methodology is Rating Companies in the Mining Industry, which can be found on our website under Methodologies.