Vale Fires Up Bank Market

Vale has put out an RFP for a multi-tranche syndicated loan, which is expected to raise $3bn-$5bn. The loan is expected to include a 3-year and a 5-year tranche. As many as 20 banks have been asked to submit proposals for the deal, which is heard to be structured as a revolver for working capital purposes. Market participants expect banks to be very competitive and say a new benchmark could be set. “Banks are going to be very aggressive, especially competing for the 5-year, and if it is too tight this will not be a good way to start the year,” says one syndicated loans banker. “Everyone will want to be part of the transaction, and Vale will probably not even pay underwriting fees,” adds another. While market participants say Brazilian, Japanese and US banks are able to bid aggressively, some European banks with higher funding costs may choose not to participate. The deadline for the submission of proposals is this week, according to bankers. The deal is apparently not event related. Vale on Friday denied rumors it is bidding for or negotiating with a fertilizer company. The Brazilian miner has been the subject of speculation it would acquire Canadian fertilizer company Potash Corp since August. US-based equity research firm Dahlman Rose has said Vale is more likely to bid for US-based Mosaic, another fertilizer company. Vale was rumored to have considered a $25bn bid for Mosaic in 2009.