Tyson Foods 2012 Annual Report Download - page 30

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Credit Ratings
2016 Notes
On November 13, 2008, Moody’s Investors Service, Inc. (Moody’s) downgraded the credit rating from "Ba1" to "Ba3." This
downgrade increased the interest rate on the 2016 Notes from 7.35% to 7.85%, effective beginning with the six-month interest
payment due April 1, 2009.
On August 19, 2010, Standard & Poor’s Financial Services LLC, a subsidiary of The McGraw-Hill Companies, Inc. (S&P), upgraded
the credit rating from "BB" to "BB+." On September 2, 2010, Moody’s upgraded the credit rating from "Ba3" to "Ba2." These
upgrades decreased the interest rate on the 2016 Notes from 7.85% to 7.35%, effective beginning with the six-month interest payment
due October 1, 2010.
On February 24, 2011, S&P upgraded the credit rating of these notes from "BB+" to "BBB-." On March 29, 2011, Moody’s upgraded
the credit rating of these notes from "Ba2" to "Ba1." These upgrades decreased the interest rate on the 2016 Notes from 7.35% to
6.85%, effective beginning with the six-month interest payment due April 1, 2011.
On June 7, 2012, Moody's upgraded the credit rating of these notes from "Ba1" to "Baa3." This upgrade decreased the interest rate on
the 2016 Notes from 6.85% to 6.60%, effective beginning with the six-month interest payment due October 1, 2012.
A one-notch downgrade by either ratings agency would increase the interest rates on the 2016 Notes by 0.25%.
Revolving Credit Facility
S&P’s corporate credit rating for Tyson Foods, Inc. is "BBB-." Moody’s senior, unsecured, subsidiary guaranteed long-term debt
rating for Tyson Foods, Inc. is "Baa3." Fitch Ratings', a wholly owned subsidiary of Fimalac, S.A. (Fitch), issuer default rating for
Tyson Foods, Inc. is "BBB." The below table outlines the fees paid on the unused portion of the facility (facility fee rate) and letter of
credit fees (undrawn letter of credit fee and borrowing spread) depending on the rating levels of Tyson Foods, Inc. from S&P, Moody's
and Fitch.
Ratings Level (S&P/Moody's/Fitch) Facility Fee Rate
Undrawn Letter of
Credit Fee and
Borrowing Spread
BBB+/Baa1/BBB+ or above 0.150% 1.125%
BBB/Baa2/BBB 0.175% 1.375%
BBB-/Baa3/BBB- (current level) 0.225% 1.625%
BB+/Ba1/BB+ 0.275% 1.875%
BB/Ba2/BB or lower or unrated 0.325% 2.125%
In the event the rating levels are split, the applicable fees and spread will be based upon the rating level in effect for two of the rating
agencies, or, if all three rating agencies have different rating levels, the applicable fees and spread will be based upon the rating level
that is between the rating levels of the other two rating agencies.
Debt Covenants
Our revolving credit facility contains affirmative and negative covenants that, among other things, may limit or restrict our ability to:
create liens and encumbrances; incur debt; merge, dissolve, liquidate or consolidate; dispose of or transfer assets; change the nature of
our business; engage in certain transactions with affiliates; and enter into sale/leaseback or hedging transactions, in each case, subject
to certain qualifications and exceptions. In addition, we are required to maintain minimum interest expense coverage and maximum
debt to capitalization ratios.
Our 2022 Notes also contain affirmative and negative covenants that, among other things, may limit or restrict our ability to: create
liens; engage in certain sale/leaseback transactions; and engage in certain consolidations, mergers and sales of assets.
We were in compliance with all debt covenants at September 29, 2012.
OFF-BALANCE SHEET ARRANGEMENTS
We do not have any off-balance sheet arrangements material to our financial position or results of operations. The off-balance sheet
arrangements we have are guarantees of debt of outside third parties, including a lease and grower loans, and residual value guarantees
covering certain operating leases for various types of equipment. See Note 19: Commitments and Contingencies of the Notes to
Consolidated Financial Statements for further discussion.