Vale Loan Pricing Said to be Tight

Vale’s $3bn syndicated loan is offering a spread of 65bp over Libor, with fees of 15bp for utilization of up to 66% and 30bp for utilization above this, according to bankers with knowledge of the transaction. The loan is heard to be structured as a new 5-year revolver, for working capital purposes. Credit Agricole, JPMorgan, Mizuho and Natixis are joint leads on the deal. While market participants say the pricing is in line with loans for other international competitors, they say it is extremely tight considering the cost of funding for banks. “While it is possible to see the logic of the pricing if you look at the pricing of transactions by competitors, it is difficult to justify this pricing from a funding perspective, given the cost of funding for banks,” says one syndicated loans banker. Rio Tinto last year last year priced a 5-year revolver at 65bp over Libor, with utilization fees of 15bp for up to a third and 30bp for higher utilization.