Vale returns looking for low-cost debt after Brumadinho tragedy – by Aaron Weinman (Reuters U.S. – November 21, 2019)

https://www.reuters.com/

NEW YORK, Nov 21 (LPC) – The insatiable appetite to lend to Latin America’s blue-chip corporations may allow Brazilian miner Vale SA to return to the loan market and borrow US$3bn to refinance debt at ultra-low rates, only 10 months after a dam disaster that left the country reeling.

In January, following the collapse of a tailings dam at an iron ore mine in the Brumadinho region, Vale pulled back on original plans to refinance debt. Ten months and a public relations debacle later, a surfeit of lenders, including relationship banks with established ties to the miner and new lenders looking to forge a bond with one of Latin America’s most frequent borrowers, are expected to flock to the transaction.

A dearth of opportunities to lend to high-quality Latin American corporations has left banks with little option but to aggressively compete for business, giving borrowers cheap access to capital, and clout to dictate lending terms that allow for cost savings and flexibility.

“There are just too many banks in the region,” one senior banker said. “The competition in Latin America, it’s like cowboys.”

Vale, rated Ba1/BBB-, has mandated Citigroup, Credit Agricole, MUFG and SMBC to lead a new five-year revolving credit facility, according to three sources with knowledge of the financing. The leads have offered the loan at just 90bp over Libor and will launch it to additional banks on Thursday during a bank meeting in New York.

For the rest of this article: https://www.reuters.com/article/vale-loans/vale-returns-looking-for-low-cost-debt-after-brumadinho-tragedy-idUSL2N2810R2