Moody's downgrades Swift

Moody's Investors Service said it lowered Swift & Co.'s corporate family and probability-of-default ratings to B2 to B3, lowered the senior unsecured notes to Caa1 (LGD4, 59%) from B3 (LGD4, 61%) and confirmed the senior subordinated notes at Caa1 (LGD5, 76%).

This concludes the review for possible downgrade begun on Dec. 19, and the outlook is stable.

The downgrade reflects Moody's concern that the challenges in the U.S. beef industry are likely to preclude material improvement in the company's weak debt protection measures, in the near term, to levels consistent with its prior rating.

The agency said the ratings reflect the company's highly volatile earnings and cash flow, very high enterprise leverage, low margins, weak credit metrics and the continuing challenging conditions in the volatile U.S. beef industry overall.

Swift's ratings are supported by its scale as the third-largest beef and pork processor in the United States, by its strong Australian operations and by the company's comfortable liquidity, Moody's said.

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