Ratings agency Standard & Poor’s has cut its ratings on debt for ConAgra Foods Inc. (NYSE: CAG) from BBB to BBB- following the company’s announcement that it would finance its $6.8 billion acquisition of Ralcorp Holdings Inc. (NYSE: RAH

) primarily with debt. S&P’s outlook for ConAgra is listed as “stable.”

The ratings cut leaves ConAgra’s debt just one notch above junk.

An S&P credit analyst said:

The downgrade for ConAgra reflects our belief that ConAgra will not be able to restore its credit measures, including adjusted debt to EBITDA to below 3x and funds from operations to total debt to nearly 30%, within two years.

The ratings firm estimates that ConAgra’s debt following the acquisition will total more than $10 billion, and other adjustments will push the total to about $11 billion.

ConAgra’s shares posted a 52-week high earlier this month, following better-than-expected quarterly results. Shares are trading down about 0.5% in the premarket this morning, at $29.06 in a 52-week range of $23.64 to $31.12.

Paul Ausick