Moody's affirms Del Monte

Moody's Investors Service said it affirmed Del Monte Foods Co.'s Ba3 corporate family rating and probability-of-default ratings, SGL-2 speculative grade liquidity rating, Ba2 (LGD3, 33%) senior secured revolving credit agreement, term loan A and term loan B and B2 (LGD5, 84%) $250 million 6¾% senior subordinated notes due 2015 and $450 million 8 5/8% senior subordinated notes due 2012.

The outlook is stable.

The affirmation follows the company's announcement that its board authorized the repurchase of up to $200 million of the company's stock over the next 36 months. Moody's expects that share repurchases, if any, will not require material debt funding given Del Monte's cash generation ability and that any share repurchases will not be done on an accelerated basis.

The agency said Del Monte's overall business profile has several elements that are strong - such as its market shares, brand portfolio and profit margin - and consistent with a low investment-grade rating.

However, these elements are more than offset in Moody's view by debt protection measures that generally score in the B category and an increasingly aggressive financial policy that is assessed at Ba.

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