Credit rating agency Moody’s increased Vale’s ratings from Ba1 to Baa3, the miner said on Tuesday. The upgrade brings Vale to the level of “investment grade.”
Moody’s said the upgrade reflects the miner’s “continued improvement in its credit metrics supported by enhanced production profile and reduction in absolute debt levels.”
“The conclusion of (the) S11D (iron ore project) allowed for a substantial raise in low cost production, while the increased focus on blending of better quality iron ore and higher premiums supported the company´s profitability,” the credit rating agency said.
Moody’s said higher cash generation and reduced Capex compared to “pre-2016 years” led to “positive free cash flows, which we expect to continue through 2020 should iron ore prices remain within our medium-term price sensitivity levels ($45-$75/ton).”
Vale’s debt reduction plans also helped it reduce its financial leverage, Moody’s noted.