S&P raises Smithfield Foods

Standard & Poor's said it raised its corporate credit rating on Smithfield Foods Inc. to BB- from B+ and the issue-level ratings on the company's senior secured debt to BB+ from BB, with an unchanged recovery rating of 1, indicating the agency's expectation for very high recovery in the event of a payment default.

In addition, S&P said it raised the issue-level ratings on the company's senior unsecured debt to BB- from B+, with an unchanged recovery rating of 3, indicating the agency's expectation for meaningful recovery in the event of a payment default.

While the estimated numerical recovery for the unsecured notes is in the 70% to 90% range, S&P said it capped the recovery rating at 3, according to the agency's criteria on unsecured debt of issuers in the BB category.

The outlook is stable.

S&P said the upgrade reflects the company's sustained improvement in operating performance and credit measures through the first quarter of fiscal 2012, ended July 31. It also reflects S&P's opinion that higher hog/pork pricing should allow Smithfield to sustain the current EBITDA level over the remainder of fiscal 2012, despite the possibility of slower economic growth in the coming quarters, as well as sustained higher feed costs, the agency said in a news release.

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