PT Vale Indonesia Tbk #BB# Corporate Credit and #BBB-# Issue-Level Ratings Outlook Remains Stable

Stocks and Financial Services Press Releases Thursday September 28, 2017 08:46
SAO PAULO--28 Sep--S&P Global Ratings

SAO PAULO (S&P Global Ratings) Sept. 27, 2017--S&P Global Ratings affirmed its 'BB' corporate credit rating on PT Vale Indonesia Tbk (PTVI). At the same time, we affirmed the 'BBB-' issue-level rating on the company's senior unsecured loan, which counts on a full and unconditional guarantee by PTVI's indirect parent company, Vale S.A. The outlook on the corporate rating is stable.

The rating affirmation reflects PTVI's strong financial metrics despite weaker nickel prices in 2016 followed by price volatility in recent quarters. The company has focused on improving operating efficiency to offset price swings. In addition, the company faces the requirement under its contract of work (CoW) to increase capacity in the next few years, which we believe it will execute with its internal cash flows, given the maintenance of low debt.

We expect PTVI to continue benefiting from the fact that it is part of Vale S.A. (Vale; BBB-/Positive/--), which includes a long-term purchase agreement for nickel. Vale also provides operational expertise, and its guarantee drives the rating on PTVI's debt.

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