Moody's lifts Tyson Foods to SGL-3

Moody's Investors Service said it upgraded Tyson Foods, Inc.'s speculative-grade liquidity rating to SGL-3 from SGL-4 following the execution of a new $1 billion asset-based revolving credit agreement and the issuance of $810 million in senior unsecured notes.

The agency affirmed the company's corporate family and probability-of-default ratings at Ba3, senior unsecured guaranteed notes due 2014 and notes due 2016 at Ba3 with a revised loss-given-default assessment of LGD3, 49% (previously LGD4, 51%), senior secured industrial revenue bonds at Ba1 (LGD2) with a revised loss-given-default rate of 20% (previously 19%) and senior unsecured unguaranteed debt at B2 (LGD5) with a revised loss-given-default rate of 86% (previously 87%).

Tyson Fresh Meats, Inc.'s senior secured second-lien debt was affirmed at Ba2 (LGD2) with a revised loss-given-default rate of 27% (previously 28%).

The outlook remains negative.

The agency said the upgrade in the speculative-grade liquidity rating is based on the fact that Tyson is no longer subject to maintenance financial covenants or rating triggers now that its previous $1 billion revolving credit and $600 million receivables securitization facilities have been replaced by a $1 billion ABL and by proceeds from the $810 million bond issue.

The ABL contains a single financial test that will not be in effect unless usage exceeds $850 million, a high threshold that Moody's feels is unlikely to be crossed.

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