Vale Overseas Prices $1B Notes

Mining giant, Vale S.A. (VALE - Analyst Report) recently announced pricing of notes, primarily intended to raise funds to meet the company’s general corporate purposes. Vales’s wholly owned subsidiary, Vale Overseas Limited priced its US$1 billion 4.375% Guaranteed Notes offering at a discounted price of 98.804% of the principal amount.

The notes will bear a coupon rate of 4.375%; interest to be paid semi-annually. It will mature in January 2022, bearing a yield on maturity of 4.525%. Of the credit rating agencies, Standard & Poor’s Rating Services provided an A- rating to the notes, Moody’s Investor Services provided a Baa2, Dominion Bond Rating Service gave a BBB (high) while Fitch Ratings offered a BBB rating.

In the third quarter 2011, the company’s total debt balance was approximately US$23.0 billion, having an average maturity of 10.1 years. It represents a sequential decline of 6.0% and carries an average cost of around 4.68% per annum. Net debt balance in the quarter jumped 37.2% sequentially to US$15.0 billion, due primarily to a fall in cash holding in the quarter.

Vale S.A is the world’s largest producer and exporter of iron ore and pellets. The company primarily engages in the mining and production of ferrous and non-ferrous metals, and aluminum-related operations, chiefly in Brazil.

The company’s net earnings per share in the third quarter plummeted by 16.8% year over year and also missed the Zacks Consensus by 37 cents. Top line in the quarter had spiked 15.5% year over year.

The current Zacks Consensus Estimate for the fourth quarter is $1.31, representing a year-over-year increase of 16.96%. Estimates for the fiscal years 2011 and 2012 are $4.65 and $4.07, representing a year-over-year growth of 43.05% and a decline of 12.47%, respectively.

We currently maintain a Neutral recommendation on the stock.

Read the full analyst report on VALE