Case Write-up Questions for Vale SA

1. Assuming the bonds are issued at par, what is the hedged cost of funds to Vale (from a U.S. dollar perspective) from the British pound and the euro bond issues? To do so, hedge the British-pound- and euro-denominated annual bond payments into U.S. dollar cash flows and find the implied interest rate. Which issue would you recommend?
2. What is the credit spread implied by the three yields anticipated by Vale? How do these compare to average credit spreads in each of the markets?
3. Compare the yield offered to Vale in each of the three currencies to yields offered by comparable companies in each of the three currencies.