Friday, September 10, 2010

"Vale and potash: ‘I (only) half believe them" (NYSE: VALE; POT; BHP; MOS)

I don't usually bother with the exchange when putting the symbol in the headline but figured, for folks unfamiliar with the behemoth, I should point out the ADR trades Big Board.
An interesting follow-up to Wednesday's "Brazil Miner Vale Wants To Be Global Fertilizer Leader" Taps Debt Markets (VALE, BHP, POT, RTP, MOS, IPI, AAUKF), from FT Alphaville:

The Chinese – and more specifically, Sinochem – gained a respite from the frenzied counter-bid speculation over BHP Billiton’s move for PotashCorp this week, following the move by Brazilian mining giant Vale to issue $1.75bn in bonds.

The mid-week issue switched the focus of bid rumours to Latin America, sparking fresh speculation that the miner could be considering acquisitions in the fertiliser sector – and thus possibly even a counter-offer to BHP’s hostile $38.6bn bid for PotashCorp, reports the FT.

Vale denied that it was considering such a bid and said it wanted the funds only for general corporate purposes, and to take advantage of new demand for higher yielding assets.
However, while relatively small in the broader scheme of things – and tiny if indeed, a $39bn bid is on the cards – Vale’s $1.75bn issue follows an earlier $1bn bond issue. As Bloomberg reports, with a total of $2.75bn in debt issued this year, Vale has now surpassed Banco Bradesco as the biggest Brazilian issuer of overseas bonds..

That’s a lot of “general” use for the money. One emerging market debt strategist, Bevan Rosenbloom with RBS, told Bloomberg:
“I half believe them [Vale]… They always have something up their sleeve. In the fertilizer business, which they want to get into, there’s still some consolidation to go and they want to be part of that….
And as one Brazil-based investment banker told the FT on Friday: “I think Vale is certainly looking at PotashCorp, but I’m not if sure it is willing to pay the big price tag… But they are in a strong financial position and could certainly technically afford it.”...MUCH MORE, including lots o'links.