Hormel Foods issues $250 bond notes

The only Fortune 500 company based in Austin - Hormel Foods -issued $250 million in bonds today.

It seems Moody's Investors Service sees Hormel as a solid investment, because it rated the offering at A2. An A2 rating means the bonds are judged to be high quality.

Here's some from Moody's announcement of this rating and the Hormel bond offering.

Moody's Investors Service assigned an A2 rating to $250 million of 10-year senior unsecured notes issued today by Hormel Foods Corp. The rating outlook is stable.

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Hormel intends to use the proceeds from the notes offering for general corporate purposes. Hormel has $350 million of senior unsecured notes coming due on June 1, 2011, but has enough cash and marketable securities (about $650 million at the end of January 2011) to retire the maturing notes without refinancing.

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Hormel remains lightly leveraged with over $750 million of EBITDA, and on a proforma basis, only $250 million of funded debt and over $500 million of cash and marketable securities.

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Having worked though an industry over-supply of turkey meat last year in the Jennie-O-Turkey Store segment, Hormel is likely to generate strong performance in most of its five operating segments.

However, Moody's remains cautious about the operating environment this year for Hormel's Grocery Products segment.

While we expect that economic conditions will continue to improve gradually in 2011, price competition is likely to remain intense even as input costs rise as consumers remain sensitive to retailer prices. Thus, some of Hormel's premium categories -- such as the highly-competitive convenience meals -- could experience flat sales growth and further margin pressure in the near-term.