Moody's Investors Service lowered the long-term ratings of Smithfield Foods, including the company's corporate family rating and probability of default rating to B1 from Ba2.

"This action was based on Moody's expectation that credit metrics will remain weak in the near term due to poor returns in the hog production business and very high leverage," the ratings agency said in a news release.

JBS is expected to pay Smithfield $565 million in cash for its beef business. Additional proceeds of about $150 million are expected when cattle are liquidated from its Five Rivers operation over the 12 months following the transaction. Moody's said while it expects that money to be applied to debt reduction and to improve further financial flexibility, it does not expect Smithfield's credit metrics after the transaction to be equal to its previous rating, "given high pre-transaction debt levels and the erosion of profit margins as a consequence of hog production operating losses."