(Adds details on recent local bond sale, background from paragraph 3)
By Guillermo Parra-Bernal
SAO PAULO, Feb 18 (Reuters) - Vale SA, the world’s largest iron ore producer, will move forward with a planned offering of 10-year, U.S. dollar-denominated global bonds during the first half of the year, a source with direct knowledge of the transaction said.
The sale of the senior notes will take place when market conditions look most favorable to lower the Rio de Janeiro-based company’s borrowing costs, said the source, who declined to be identified since the deal is still under analysis. The source did not detail terms of the proposed deal, such as the size of the issue.
The last time Vale sold 10-year dollar debt in international markets was on March 29, 2012, when it raised $1.025 billion in 4.375 percent bonds, on top of a $1 billion placement made in January of the same year, according to Thomson Reuters data.
A spokesman for the Rio de Janeiro-based company declined to comment on a potential sale this year.
Vale is raising money from investors to finance its $14.8 billion investment plan for this year, of which 80 percent will be earmarked for new iron ore projects and rail, port and other facilities needed to move its products to market.
The yield on Vale’s outstanding $2.025 billion 10-year bond due in January 2022 slipped to 4.723 percent on Tuesday from 4.748 percent the previous session.
Late in January, Vale tapped Brazil’s domestic bond market with a sale of 1 billion reais ($417 million) of so-called infrastructure debentures at the lowest borrowing cost ever for a Brazilian corporate issuer.
The company sold 550 million reais in seven-year notes and 150 million reais in 10-year notes, both inflation-linked securities, with yields about 0.15 percentage points and 0.10 percentage points below the normal cost of borrowing for the Brazilian government in comparable maturities. The company also sold 12-year and 15-year notes in the offering.
Investors placed bids worth about 3.5 billion reais for Vale’s infrastructure debentures, 3.5 times the amount finally sold. About 3.2 billion reais worth of bids came from individual investors, the source said.
$1=2.40 Brazilian reais Reporting by Guillermo Parra-Bernal; Additional reporting by Jeb Blount in Rio de Janeiro; Editing by W Simon and Peter Galloway