UPDATE 2-Moody's puts miner Vale on review for possible downgrade to junk

viernes 22 de enero de 2016 15:44 GYT

(Adds tonnage of iron ore exports blocked at Vale port)

RIO DE JANEIRO Jan 22 (Reuters) - Moody's placed the credit ratings of Brazilian iron ore miner Vale SA under review for possible downgrade to "junk" status on Friday, one day after it put nine mining companies in Latin America on review for downgrade due to low metals prices.

Moody's said slowing growth in the Chinese economy, which consumes half the world's base metals and is the world's largest consumer of iron ore, is weakening demand and prices for some of Vale's principal products.

Vale is the world's largest iron ore exporter.

"China's outsized influence on the commodities market, coupled with the need for significant recalibration of supply to bring the industry back into balance indicates that this is not a normal cyclical downturn, but a fundamental shift that will place an unprecedented level of stress on mining companies," Moody's wrote in a statement announcing the ratings review.

The price for Chinese-landed iron ore .IO62-CNI=SI, which makes up the bulk of Vale's revenue, is trading at its lowest level in more than a decade.

Vale's Baa3 rating on its long-term foreign-currency debt is only one step above a non-investment grade, or junk, rating. Were Vale to be downgraded, many investment funds would be prohibited from owning its debt because they are restricted to holding only investment-grade securities.

This could raise Vale's borrowing costs as it struggles with lower iron ore revenues and faces a rising wave of environmental costs.

On Thursday, Brazil's government said it was nearing an estimated 20-billion-real ($4.8 billion) accord with Samarco Mineração SA to repair damage from a deadly November iron ore tailings dam burst.   Continuación...