S&P cuts Smithfield, notes to BB-

Standard & Poor's said it lowered its corporate credit rating on Smithfield Foods Inc. to BB- from BB.

The outlook is stable.

The agency also lowered the rating on Smithfield's senior unsecured debt to BB- from BB. This debt is comprised of $1 billion 6 5/8% senior notes due 2022 and $500 million 7¾% senior notes due 2017. The recovery rating remains 3, indicating an expectation of meaningful recovery (50%-70%) in the event of a payment default.

All ratings on Smithfield were removed from CreditWatch, where they were placed with negative implications on May 29 following Shuanghui International Holdings Ltd.'s announcement that it would buy Smithfield for about $7.1 billion, including Smithfield's outstanding debt.

The BB- ratings on Sun Merger Sub Inc.'s (original issuer) $400 million senior unsecured note due 2021 and $500 million senior unsecured notes due 2018 remain unchanged with a recovery rating of 3. This debt became a senior unsecured debt obligation of Smithfield Foods, Inc. following Sun Merger's merger with and into Smithfield, substantially concurrent with the close of the Shuanghui acquisition.

"The downgrade reflects our opinion that Smithfield's increased debt levels following its acquisition by Shuanghui results in a weaker credit profile for the company," S&P credit analyst Chris Johnson said in a news release.

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