Tyson plunges after fitch lowers its debt rating to junk grade

Tyson Foods Inc., the second- largest U.S. chicken producer, fell the most in nine months in New York trading after Fitch Ratings cut its debt to non- investment grade, which may increase the company's borrowing costs.

Tyson tumbled $1.21, or 8.1 percent, to $13.69 at 11:39 a.m. in New York Stock Exchange composite trading. A close at that price would mark the biggest decline since Sept. 5.

Fitch yesterday lowered Tyson's issuer default rating to BB+, the highest non-investment grade, from BBB-, because of expectations that less-than-anticipated earnings and cash flow will erode Tyson's credit.

``Higher than predicted grain cost and the length of time required to pass these costs on, through pricing, is reducing the profitability of the company's poultry operations, which typically generates a significant portion of the company's cash flow,'' Fitch analysts led by Carla Taylor said in a statement.

Tyson had about $3 billion of debt on March 29, Fitch said.

Prices of corn and soybeans, key ingredients in chicken feed, have soared in the past year, pushing up Tyson's expenses. Corn climbed 84 percent on the Chicago Board of Trade in the year ending yesterday, touching a record $7.915 a bushel on June 16. Soybeans gained 83 percent in the same period, touching a record $15.865 a bushel on March 3.