Moody's changes ConAgra outlook to developing

Moody's Investors Service said it affirmed the Baa2 senior debt ratings of ConAgra Foods, Inc. and revised the outlook to developing from negative following the company's announced plan to exit its troubled $5 billion private brands business.

"The decision to divest private brands provides a widely anticipated resolution to ConAgra's two-year struggle to operate branded and private label businesses together," Brian Weddington, a Moody's senior credit officer, said in an agency news release. "This was an unproven strategy that was the source of great skepticism at the start. The divesture could lead to a stronger or weaker profile for ConAgra, depending on the details of the divesture, future strategy and post-transaction capital structure.”

ConAgra's Baa2 rating is supported by its diversified portfolio of branded, private label and commercial food products, solid cash flows and relatively large scale, Moody’s said.

The rating is constrained by weak credit metrics that have persisted since the January 2013 Ralcorp acquisition due to integration and operational challenges and by the limited strength of its portfolio of mostly middle-tier brands, the agency said.

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