Moody's ups Tyson to SGL-2

Moody's Investors Service said it upgraded the speculative grade liquidity rating of Tyson Foods, Inc. to SGL-2 (good liquidity) from SGL-3 (adequate liquidity) based on the company's stronger cash flow prospects given its cost cutting and improving protein markets.

The agency affirmed the corporate family and probability-of-default ratings at Ba1, senior unsecured unguaranteed debt at Ba2 (LGD5, 88%) and $1 billion senior unsecured bank credit agreement and $1 billion 6.06% senior unsecured notes due 2016, both guaranteed by Tyson Fresh Meats, Inc., at Ba1 (LGD3, 44%).

The outlook is negative.

Tyson's earnings and cash flow can be volatile due to seasonality and exposure to commodity chicken, beef and pork markets, Moody's said.

"The company's free cash flow will more than cover its working capital, capital expenditures, dividends and scheduled debt payments over the next 12 months, although cushion is likely to be modest at seasonal low points," lead analyst Elaine Francolino said in a written statement.

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