Nov. 6 (Bloomberg) -- Sadia SA, the Brazilian foodmaker that lost at least 545 million reais ($245 million) on currency bets, had its debt rating reduced by Moody's Investors Service.

The rating was cut to B1, four levels below investment grade, from Ba3 because of surging debt to cover the losses, Moody's said today in a statement. Sadia's total debt inflated to 6.7 times its earnings before interest, taxes, depreciation and amortization at the end of last quarter, from 3.7 times at the end of the second quarter, Moody's said.

``The downgrade of Sadia's corporate family and senior unsecured debt ratings to B1 is primarily due to the company's significant increase in leverage,'' Soummo Mukherjee, a Moody's analyst, said in the statement. The indebtedness ballooned ``in anticipation of cash outflows to cover derivatives exposure.''

``Sadia has sufficient liquidity to meet all short-term obligations if the real does not experience significant further weakening,'' Moody's said in the statement. It said the rating outlook for Concordia, Brazil-based Sadia is stable.

Brazil's second-biggest foodmaker last week posted its first net loss in nine years for the third quarter because of 1.21 billion reais in financial expenses, mostly from bad bets on currency derivatives. The net loss of 777.4 million reais compares with a profit of 188.4 million reais a year earlier.

Moody's said Sadia may still lose $2.4 billion because of its remaining derivatives exposure at the end of September.

To contact the reporter on this story: Carlos Caminada in Sao Paulo at at ccaminada1@bloomberg.net.

Last Updated: November 6, 2008 15:56 EST