Vale S.A. (Vale) announced its 3Q 09 results on 28 October 2009. Although financial performance deteriorated on a y-o-y basis, the company's numbers improved sequentially as metal prices rebounded after bottoming out in 1H 09. However, we believe that the current ADR price already discounts for improving business fundamentals and hence we reiterate the ADR a HOLD. We will reassess our preferred ADR (1 preferred ADR = 1 Brazilian preferred share) rating in our next update report. Although we continue to anticipate a negative currency impact on the Brazilian preferred stock over the coming 6-12 months, considering our fundamental outlook we maintain our HOLD rating. We will reassess our Brazilian preferred stock rating in our next update report.

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