S&P Places Smithfield Foods (SFD) on CreditWatch; Cites WH Group IPO Filing

Standard & Poor's Ratings Services today placed its ratings on Smithfield, Va.-based Smithfield Foods Inc. (NYSE: SFD), including the 'BB-' corporate credit rating, on CreditWatch with positive implications. Smithfield Foods reported debt outstanding of $3 billion as of Dec. 31, 2013.



"The CreditWatch placement follows WH Group Ltd.'s (Smithfield's parent company) announcement that it is seeking to issue equity through an IPO on the Hong Kong Stock Exchange, with the mid-point of the indicative offer price range resulting in net proceeds of approximately $3.6 billion," said credit analyst Chris Johnson. "We expect the company to use net proceeds from the transaction for debt repayment. If net proceeds well exceed $4 billion and debt is repaid as currently envisioned, we believe this transaction could improve the group's financial risk profile and result in a higher group credit profile." 



We intend to resolve the CreditWatch listing following the completion of WH Group's planned IPO. We will assess the impact of any debt reduction on both the group's and Smithfield's financial risk profiles as appropriate. However, if WH Group does not complete the proposed IPO as currently described, we would reevaluate the CreditWatch listing and ratings.

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