DBRS Assigns Provisional BBB (low) Rating with a Negative Trend to Vale’s New Long-Term Debt Issue

DBRS Limited (DBRS) has today assigned a provisional rating of BBB (low) with a Negative trend to the proposed long-term notes (the Notes) to be issued by Vale Overseas Limited (Vale Overseas or the Company) in the U.S. capital markets. Vale Overseas intends to use the proceeds for general corporate purposes, including repayment of indebtedness.

The Notes will be offered by way of a supplemental prospectus to the Company’s prospectus dated September 29, 2015, and filed with the United States Securities and Exchange Commission (SEC). A preliminary version of the supplementary prospectus was filed with the SEC on June 7, 2016. An application will be made to list the Notes on the New York Stock Exchange.

The Notes will be general obligations of Vale Overseas and are not secured by any collateral. The rights of holders to payment under the Notes will be: (1) junior to the rights of secured creditors of Vale Overseas to the extent of their interest in Vale Overseas’ assets and (2) equal with the rights of creditors under all of Vale Overseas’ other unsecured and unsubordinated debt.

The guaranty of the Notes will be a general obligation of Vale S.A. (Vale) and are not secured by any collateral. The rights of holders to payment under the guaranty 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 Overseas’ draft of the preliminary prospectus supplement dated June 7, 2016, and related documents; Vale’s public disclosure documents, including its Q1 2016 interim report and its 2015 annual report; and the current financial structure, business profile, credit metrics and market and business outlook for Vale Overseas, 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.