RIO DE JANEIRO, Sept 1 (Reuters) - Fitch has upgraded the rating of Brazilian miner Vale S.A., saying the iron ore producer has lower chances of default following actions taken 18 months after a deadly dam disaster in Brumadinho city, the rating agency said in a note.
The upgrade to “BBB” from “BBB-minus” applies to both foreign and local currency long-term issuer default ratings, Fitch said.
Senior unsecured debt ratings, Vale Overseas Limited and Vale Canada Limited were also upgraded to “BBB.” Vale’s national long-term rating was fat “AAA(bra).” The rating outlook remained stable.
“Actions reflect steps taken by Vale over the past 18 months that have lowered the risk of future dam failures and the implications upon the environment and people in the surrounding community should they occur,” Fitch said in a note.
The rating actions also take into consideration Vale’s “extremely low leverage and strong free cash flow,” which position it to withstand any sharp downturn in iron ore prices or unexpected legal liabilities that relate to the Brumadinho dam failure, Fitch said. (Reporting by Sabrina Valle and Luciano Costa; Editing by Leslie Adler)
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