Jan. 9 (Bloomberg) -- Cia. Vale do Rio Doce, the world's biggest iron-ore producer, sold $500 million of 30-year bonds, borrowing on international markets for the longest term ever by a Brazilian company.

Vale sold the bonds to yield 8.35 percent, less than the 9.02 percent yield on the Brazilian government's bond maturing in 2030. Merrill Lynch & Co. lead managed the sale.

``This is a turning point for the company,'' Vale Chief Financial Officer Fabio Barbosa said at a news conference at the company's Rio de Janeiro headquarters. ``It reduces people's perception of risk and reduces our cost of capital.''

Vale's sale of bonds maturing in three decades shows the value investors place on its global leadership in iron ore and ability to generate nearly three quarters of its revenue from exports, said Raphael Kassin, who helps manage about $1 billion in emerging market debt at ABN Amro Asset Management in London.

``The company is among the best in Brazil, probably Latin America,'' said Kassin, who declined to say whether he bought the bonds. ``Pricing has to do with the fact that the company's ability to earn foreign exchange is very good, probably more stable than the government.''

`Historic'

Vale tapped demand for Brazilian debt after the yield on the government's benchmark bond due 2014 fell to below 8 percent from about 30 percent in October 2002, underscoring investor confidence in President Luiz Inacio Lula da Silva's commitment to fight inflation.

``This is not a window that's going to close,'' said Barbosa. ``Brazil is harvesting the fruits of the remarkable work that was done in 2003.''

Investors placed orders worth $1.6 billion with 79 percent of the $500 million bought by U.S. investors, 11 percent from Europe and 10 percent from Brazil, said Dan Vallimarescu, managing director and head of Latin America debt capital markets at Merrill Lynch in New York.

The sale was an ``historic transaction, in the sense that the maturities are ground-breaking,'' said Vallimarescu. ``Although it's a worldwide company that strides the global stage, it's based in Brazil and that says something about investors' confidence in the country.''

Vale has said it wants to raise funds abroad to finance investments of as much as $6 billion over three years to boost output and meet demand for iron ore, copper and other commodities from markets such as China. The company joins only a few corporate borrowers from developing countries that have sold 30- year bonds.

Vale registered in December with the Securities and Exchange Commission to sell as much as $2 billion in debt. Moody's Investors Service gave a provisional Ba2 rating to the bonds that Vale registered to sell, two levels below investment grade, though three levels above the B2 rating for Brazil's sovereign debt.

Last Updated: January 9, 2004 16:28 EST