Brazilian miner and iron ore producer Vale announced this week it has priced a five-year senior unsecured notes due June 2021 and owned by its wholly owned subsidiary Vale Overseas Limited (Vale Overseas) at $1.25 billion, following years of hiatus in the market. Vale’s last effort to raise money overseas was in 2012.
According to the company, it will use the money it will get from through the international bond foray for corporate purposes in general, including debt cutting, one of the company’s core targets so far.
“The notes will bear a coupon of 5.875 percent per year, payable semi-annually, and were sold at a price of 100.000 percent of the principal amount. These notes will mature in June 2021 and were priced with a spread of 464.1 basis points over US Treasuries, resulting in a yield to maturity of 5.875 percent,” the company explained in a press release.
Vale is planning a $10 billion core asset sale by 2017 as a way to reduce debt.
Commenting on Vale’s notes, credit rating agency Fitch estimated Vale could sell some $2 billion assets over the next six months.
"Vale's ambitions to reduce net debt to around $15 billion over the next 18 months could be realized through the sale of non-core and core assets," Fitch added.