Vale CFO Says Loan Only Backup

A $3bn credit facility being prepared by Vale is intended for standby purposes only, CFO Guilherme Cavalcanti tells LatinFinance. “Our idea is to increase the standby facilities by $3bn, and we are studying this,” he says. “It is just an insurance, and not intended to be drawn, only to increase flexibility,” he says. The Brazilian miner is in the process of choosing banks and leaning towards a 5-year loan, rather than a combination of 3 and 5 years, he says. The deadline for Vale’s RFP for a $3bn syndicated loan was moved to last Friday, after originally being set for last Wednesday, according to market participants. Winners should be announced this week and bankers expect 3 leads to be named. Cavalcanti says the cost should be similar to what it would get for a new syndicated loan with specific use of proceeds. Cavalcanti says this year Vale will focus on organic growth, rather than large M&A. As far as the bond markets go, the official says this year likely will only involve liability management. “We don’t need to tap the markets to finance our needs in 2011, but we always look for opportunities to lower the costs of our debt and extend maturities,” he says. Vale, whose $25.3bn total debt has a 10-year average maturity and average cost around 5.0%, should generate enough cashflow to cover its $24bn capex. The analyst consensus forecast is for about $35bn Ebitda from Vale in 2011.