S&P Lifts Outlook on Vale S.A. (VALE) to Stable; Ratings Affirmed
Get access to the best calls on Wall Street with StreetInsider.com's Ratings Insider Elite. Get your Free Trial here.
S&P Global revised its outlook on our global and national scale ratings on Vale S.A. (NYSE: VALE) to stable from negative. We also affirmed our 'BBB-' global scale corporate credit ratings and issue-level ratings on bonds issued through Vale Canada Ltd., Vale Overseas Ltd., and PT Vale Indonesia Tbk. At the same time, we affirmed our 'brAAA' Brazilian national scale ratings on Vale.
We have just revised upwards our price curve assumptions for iron ore, nickel, and gold (please see "S&P Global Ratings Revises Its Price Assumptions For Iron Ore, Gold, Zinc, And Aluminum", published Aug. 26, 2016).
The higher prices are yielding incremental cash flows for Vale, which help alleviate the pressure on its cash flows and leverage ratios stemming from its aggressive investment plan. In this scenario, the need for Vale to divest its assets to avoid debt from rising, in our opinion, is less necessary than before, at least from a ratings perspective. We still believe market conditions may weaken in the next year or so, because we assume prices to soften. However, our revised estimates suggest that Vale will increase its operating cash generation by around $2 billion in 2016, higher than our previous estimates, while maintaining cash levels close to $3 billion by year-end, which would make the company more resilient to downturn scenarios.
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- Jefferies Cuts Price Target on Masco Corp. (MAS) to $39
- Stifel Remains Sidelined on Crane Co. (CR) Following Earnings Call
- Wedbush Raises price Target on NCR Corp. (NCR) Following 3Q; Reiterates Neutral
Create E-mail Alert Related CategoriesCredit Ratings
Related EntitiesStandard & Poor's
Sign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!