Moody's affirms Smithfield

Moody's Investors Service said it affirmed Smithfield Foods, Inc.'s Ba2 corporate family and probability-of-default ratings amid the company's plans to sell its beef processing and cattle feeding operation to JBS SA for $565 million in cash.

The company's senior unsecured debt rating at Ba3 (LGD5, 84% from 82%) and speculative grade liquidity rating at SGL-3 also were affirmed.

The outlook remains negative.

Moody's said the affirmation is based on the expectation that sale proceeds would be applied to debt reduction.

Smithfield's Ba2 corporate family rating reflects the company's high leverage, somewhat volatile earnings and cash flow stream, aggressive acquisition strategy as well as complex and changing business structure, the agency said.

Ratings are supported by the company's size and market position, geographic and product diversity, and solid brand in the U.S. pork industry, Moody's said.

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