Vale, Cosan Deny Derivatives Losses

Both Vale and Cosan say they have not suffered losses related to hedging and protection against currency fluctuations. In the wake of a substantial loss by Sadia – some BRL760m – and an unknown amount by Aracruz announced late last week, speculation of further NDF and FX hedge losses at exporters ran rife in the investing community. Vale emphasizes that 95% of its revenue is dollar-based and that 99% of its debt is also based on the US currency, despite the fact that it borrows in the local BRL market. Cosan says it does not have any leveraged positions in what it calls speculative derivatives with exposure to fluctuating FX. Embraer said late Friday that its hedge policy does not have any speculative component and that the derivative instruments in place are exclusively held to protect its operations against a potential loss arising from adverse changes in interest and FX. It adds that it only has NDFs and plain vanilla interest rate swaps, without any leverage.