Bloomberg News

Vale Debt Rating Raised to BBB+ by Standard & Poor's

July 29, 2008

Cia. Vale do Rio Doce, the world's largest iron-ore producer, had its debt rating increased one level by Standard & Poor's Inc. after the mining company raised $11.45 billion in a share offering.

Vale's rating was elevated to BBB+, the third-lowest for investment-grade securities, from BBB to reflect ``an improvement in the company's capital structure,'' S&P said today in a statement.

The money raised in the share offer ``adds to the company's liquidity and improves its ability to handle its aggressive capital-expenditure'' program, Reginaldo Takara, a Sao Paulo- based analyst for S&P, said in a statement.

Vale still faces rising costs as the Brazilian real rises against the dollar, the currency used in most of the company's sales, Takara said in an interview. Vale also has been hurt by a drop in the price of nickel and by some production delays in the first quarter, he said.

``Thanks to its strong cost position in most products it trades, we expect Vale to continue reporting margins fairly higher than its peers,'' Takara said in the statement.

The rating on Vale's subsidiary nickel-producing unit, Vale Inco Ltd., also was raised to BBB+ from BBB with a stable outlook, S&P said in the statement.

To contact the reporter on this story: Diana Kinch in Rio de Janeiro

To contact the editor responsible for this story: Steve Stroth at

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