Top Banks to Book-Run Kraft's Bond Issue to Fund Cadbury Takeover

Kraft Foods is set to raise approximately USD 4 billion through a bond sale to finance its acquisition of Cadbury, a British chocolate maker. The sale, which will be book-run by top banks, includes four tranches of dollar-denominated bonds with varying maturities, ranging from 3 years and 3 months to 30 years. The bonds will be priced to yield 150 to 187.5 basis points above comparable Treasury bonds.

Key Takeaways:

• Kraft Foods aims to raise approximately USD 4 billion through a bond sale to finance its acquisition of Cadbury.
• The bond sale will be book-run by top banks, including Citigroup, BNP Paribas, Deutsche Bank, HSBC, and Royal Bank of Scotland.
• The bond sale includes four tranches of dollar-denominated bonds with varying maturities: 3 years and 3 months, 6 years, 10 years, and 30 years.
• The bonds will be priced to yield 150 to 187.5 basis points above comparable Treasury bonds.
• Kraft Foods is expected to sell more bonds in foreign currencies to raise additional funds.
• Standard & Poor's cut Kraft Foods' credit rating from A- to BBB, citing concerns over its debt burden, but gave it a "positive" outlook citing expectations of debt repayment and cash flow growth.

Statistics:

• Kraft Foods expects to raise approximately USD 4 billion through the bond sale.
• The bond sale includes four tranches of dollar-denominated bonds with varying maturities.
• The bonds will be priced to yield 150-187.5 basis points above comparable Treasury bonds.
• Kraft Foods' debt burden: USD 19 billion (acquisition of Cadbury).
• Standard & Poor's credit rating: A- to BBB (reflecting concerns over debt burden), with a "positive" outlook.

Sources:

• Banking and Credit News, 4 February 2010
• Financial Times, (cited by Banking and Credit News)
• Standard & Poor's, (cited by Banking and Credit News)