Vale, the world’s second largest iron-ore producer, is tapping international bond markets for the first time in a year amid a debt buyback.
Vale Overseas, a subsidiary of the Rio de Janeiro-based firm, is selling new dollar notes maturing in 30 years, according to people familiar with the matter. Initial price talks are taking place at a spread of about 250 basis points over similar US Treasuries, said the people, who asked not to be identified because they’re not authorized to speak about it.
The company is proposing to repurchase up to $500-million of bonds due in 2034, 2036 and 2039 for cash, according to a statement on Tuesday. The transaction is subject to the completion of an offering of Vale Overseas notes, the company said.
The transaction “helps reduce interest costs and spread out maturities,” also increasing liquidity on the curve, said Peter Varga, a senior portfolio manager at Erste Asset Management.
Vale last tapped global markets in June of 2023, with a $1.5-billion sale of bonds maturing in 2033. Those notes have handed investors a loss of 1% since the start to the year, compared to a 2.7% gain for emerging-market bonds, according to data compiled by Bloomberg.