Marfrig Alimentos' cash flows for 2011 were lower than we expected and may fall short in 2012. Debt has increased not only to finance capital expenditures but to fund higher working capital needs and service increasing interest expenses. We are revising the outlook on the company to negative from stable and affirming our 'B+' rating. The negative outlook reflects the company's tight covenant cushion and some refinancing needs in the intermediate term, coupled with operating challenges to strengthen cash flows. On Oct. 19, 2011, Standard&Poor's Ratings Services revised the outlook on Brazil-based food producer Marfrig Alimentos S.A. to negative from stable. At the same time, we affirmed the 'B+' global-scale and 'brBBB+' Brazilian national-scale ratings on Marfrig. The
