Tyson Foods issues $1.5 billion in senior debt

Springdale-based Tyson Foods issued $1.5 billion in new debt with $600 million of senior notes due 2029 and $900 million in longer-term debt due 2034. Tyson said it will use the proceeds to retire $1.25 billion of senior notes due in August. Those bonds have an interest rate of 3.9%.

Other proceeds will be used for corporate purposes.

The 2029 notes will bear interest at an annual fixed rate equal to 5.4% and the 2034 notes will bear interest at a fixed rate equal to 5.7%, according to the filing with the U.S. Securities and Exchange Commission. The notes will pay interest semi-annually in March and September.

Tyson worked with BofA Securities and Morgan Stanley as representatives of several underwriters with the issue of these senior notes. The non-secured corporate bonds were rated Baa2 by Moody’s, which is the lowest level allowed to be investment grade quality.

Tyson Foods reported $1.5 billion in cash as of December 2023 and Moody’s projects slightly positive free cash flow in the next 12 to 18 months despite a negative overall outlook for the company given continued challenges in the beef business. However, Moody’s reports Tyson has adequate liquidity supported by an undrawn $2.25 billion revolving bank credit facility expiring in September 2026 and good operating cash flows.

Moody’s expects Tyson will maintain sufficient liquidity to manage through the protein downturns and that an earnings recovery will ultimately reduce leverage and restore positive free cash flow. Moody’s said Tyson’s financial strategy is balanced with a low leverage target providing some offset to the steady pace of dividend growth and share repurchase activity.