ADRs in Focus: Vale ADRs up on possible S&P raise

U.S.-traded shares of Companhia Vale do Rio Doce SA rose sharply on Tuesday after Standard & Poor's Rating Services said it put its "BBB" rating on CreditWatch for a possible upgrade, citing improvements to its business and a $14 billion equity infusion.

The move, which affects Vale's company's long-term corporate credit rating, reflects improvements to the company's operations, S&P said, including its stronger expected cash flow, higher iron ore prices and "fairly favorable" profitability in nickel mining.

"The CreditWatch listing reflects the positive impact that the recently announced $14 billion equity infusion will have on Vale's capital structure and financial flexibility," S&P credit analyst Reginaldo Takara said in a statement.

Last week, Vale, the world's No. 1 producer of iron ore, said it requested permission with Brazil's securities and exchange commission to issue $14 billion in shares to raise cash for acquisitions and growth.

ADRs of Vale rose $1.45, or 4.2 percent, to $36.29 in afternoon trading. ADRs, or American Depositary Receipts, are securities designed to allow U.S. investors to trade shares of companies based overseas.

Meanwhile, Peru's Compania de Minas Buenaventura SA rose $1.45, or 2.3 percent, to $63.89.

The broader ADR market traded higher Tuesday. The Bank of New York Latin America ADR Index gained 10.84 points, or 2.3 percent, to $475.89.

The Bank of New York Composite ADR Index added 1.50 points to 174.93 as major U.S. indexes traded lower.