Business · Companies · 2 hrs ago
Vale seeks approval for yuan bond program in China
Vale has asked to register a bond program in China worth up to 10 billion yuan, for possible issues between 2026 and 2028.
The proposed bonds would be backed by Vale, but the plan still needs approval and is not an actual bond sale.
The program would let Vale borrow in yuan, China's currency, in the Chinese domestic bond market.
These bonds, known as panda bonds, are drawing more foreign issuers, and China's debt market is estimated at about $28 trillion.
Brazil's Treasury is also preparing its first yuan bond issue, worth up to 5 billion yuan, to diversify how the government funds its debt.
Suzano, another Brazilian company, issued yuan bonds in 2024 and used a currency swap to convert the cost into dollars; it said the resulting cost was below comparable US borrowing.
Borrowing costs can change after currency swaps, so a low interest rate in yuan does not guarantee cheaper financing in dollars.
Vale's proposal depends on Chinese approval, while the Treasury's planned issue would be a separate step.
Vale’s subsidiary Vale Overseas Limited has applied to register a yuan-denominated bond program in China worth up to 10 billion yuan.
The program would run from 2026 to 2028, carry a guarantee from Vale and requires approval from China’s NAFMII.
The application is not an actual bond issuance.
Vale’s move comes as Brazil’s Treasury prepares a possible sovereign yuan bond issue of up to 5 billion yuan.
Suzano issued 1.2 billion yuan in panda bonds in 2024 and said its financing cost after a currency swap was below the cost of comparable US bonds.
- Who
- Vale Overseas Limited, a subsidiary of Vale, filed the application.
- What
- It sought to register a yuan-denominated bond program of up to 10 billion yuan. The program still requires approval and is not an actual issuance.
- When
- Vale informed the market on Tuesday, October 20. The program would cover 2026 to 2028.
- Where
- China.
- Why
- Not stated for Vale. The article says China accounts for about half of Vale’s revenue.
This story does not have two clearly opposing sides.
Suzano issued 1.2 billion yuan in panda bonds with a three-year maturity and a 2.8% annual coupon.
Vale informed the market that Vale Overseas Limited had applied to register a yuan bond program in China.
The proposed period for Vale’s bond program.
- Proposed program
- Up to 10 billion yuan
- Program period
- 2026 to 2028
- Required approval
- China’s NAFMII
- Vale guarantee
- The proposed bonds would be guaranteed by Vale
- Suzano issuance
- 1.2 billion yuan in November 2024