Fitch ups Smithfield Foods

Fitch Ratings said it upgraded Smithfield Foods, Inc.'s long-term issuer default rating to BB- from B+ and senior unsecured debt to BB- from B/RR5.

The agency affirmed the asset-based inventory revolver at BB+, secured term loan at BB+ and secured notes at BB+.

Recovery ratings were withdrawn due to Smithfield's lower overall probability of default, according to the agency.

The outlook is stable.

The upgrade is due to considerable debt reduction along with consistently better-than-expected operating performance and credit statistics, the agency said.

Smithfield's ratings incorporate expectation that total debt-to-operating income will be about 3 times to 4.0x and that the firm will generate free cash flow in most years, the agency said.

The company's ratings recognize the negative impact volatile grain and potentially lower pork and live hog prices can have on it's earnings and operating cash flow, the agency noted.

Partially offsetting these negatives is the firm's meaningful and growing portfolio of branded value added packaged meats products, Fitch said.

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