S&P rates Smithfield Foods note BB-

Standard & Poor's said it assigned a BB- senior secured debt and 1 recovery rating to Smithfield Foods Inc.'s planned $500 million senior secured note offering due 2014.

The B corporate credit rating was affirmed.

The outlook is negative.

Proceeds from this offering as well as the company's planned $1 billion asset backed revolving credit facility (unrated) and the planned $200 million term loan maturing in 2013 (unrated) will replace Smithfield's U.S. credit facility, will help refinance near-term debt maturities and be used for general corporate purposes.

"The ratings on Smithfield Foods Inc. reflect the continued weak operating performance in the company's hog production segment, volatility of feed costs, cyclicality of the swine industry and very high debt leverage," S&P analyst Patrick Jeffrey said in a statement.

As a result of very weak operations in fiscal 2009, total debt-to-EBITDA ratio was 15.7x, the agency said.

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