CVRD swapping old debt for new

Companhia Vale do Rio Doce (RIO-N) has issued US$1 billion in notes in a move to reorganize its debt at a significantly lower interest rate.

The new notes mature in January 2016 and bear interest at 6.25% and were priced at 99.97% of face value for a yield of 6.254%. The rate — about 2% above U.S treasury bonds maturing around the same time — is the lowest paid for a 10-year debt issuance by a Brazilian company. The bonds carry a BBB rating from Standard & Poors.

The bond float will allow CVRD to redeem US$300 million in notes maturing in 2013 that bore interest at 9%. CVRD is offering an 18.5% premium over the bonds’ principal amount, plus unpaid accrued interest.