OREANDA-NEWS. S&P Global Ratings assigned its 'BBB-' issue-level rating to Vale Overseas Ltd.'s proposed senior unsecured bond, which Vale S. A. (Vale; BBB-/Negative/--) will fully guarantee. The bonds will rank equal to Vale Overseas' other senior unsecured debt, and the guarantee will rank equally in right of payment with Vales' all other unsecured and unsubordinated debt obligations. We expect Vale to use most of the proceeds for debt refinancing.

Our 'BBB-' rating and the negative outlook on Vale mainly reflect the financial obligations from the agreement signed with Brazilian Authorities for the remediation efforts following the dam failure at its joint venture, Samarco Mineracao S. A., the uncertainties around the latter's resumption of operations, and pressures on Vale's free cash flow generation stemming from a considerable investment program amid volatile iron ore prices. For a complete credit rationale, please see "Vale 'BBB-' And 'brAAA' Ratings Affirmed; Outlook Remains Negative On Still Weak Leverage Metrics For 2016," published April 28, 2016.