Business

Vale SA (ADR) (NYSE:VALE) Signs $2 Billion Credit Line, Replacing 2013 Agreement

Vale SA (ADR) (NYSE:VALE), a mining company from Brazil has signed revolving $2 billion credit facility that will last for five years. The new deal will replace the five-year $2 billion credit facility that was signed in 2013. The company disclosed in its securities filing that the new credit facility will be from 18 banks and will add to a $3 billion loan secured in 2015. The credit facility is expected to offer additional liquidity to the company and its subsidiaries.

Vale’s has been on a downfall in the recent times. In its most recent report, Zacks Investment Research downgraded the stock from a hold to a sell rating. According to the research company, Vale’s share performed dismally in the steel industry over the last three months. Over the last one month, Zacks estimate for the stock shifted to the south for both 2017 and 2018. Vale reported much weaker earnings for 2017 as expected and predicted. This trend is expected to continue due to the anticipated drop in demand for steel in China, which analysts says will severally eat into the short term prices of steel. This will in turn affect the company’s profitability and earnings. Other factors that could probably be on the company’s watch list are natural calamities, increasing rivalry and completion in the mining industry as well unfriendly government policies.

Several other financial research companies have also weighed in on Vale’s performance. Jefferies Group LLC set Vale’s price target at $9.00. Jefferies Group also gave the hold rating on the stock. Additionally, HSBC Holdings plc also gave a hold rating to the stock plus a price target of $10.00 down from the previous projection of $10.25. In its report released on April 24, Vetr gave the stock a buy rating down from the strong-buy rating that was initially issued. Vetr also set the price at $9.76. TheStreet however upgraded the stock from the previous C+ to B- in its most recent report. Credit Suisse Group AG gave a price target of $7.00 and rated the stock with a hold.

The stock opened the Monday session with an impressive 0.48% or +0.04 rise to trade at $8.31.

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