Cadbury Buy To Be Financed By Debt Sale By Kraft (CBY, KFT)

A rise in borrowing costs for companies will compel Kraft Foods Inc (NYSE: KFT) to issue debt to finance the takeover of Cadbury Plc (NYSE: CBY). It is expected that Kraft will sell at least $4 billion of debt due over tenures of 3.25, 6, 10 and 30 years. Yields on investment grade corporate bonds rose on an average to 4.623 percent yesterday, the highest since Jan. 13.

"Kraft’s businesses are fairly recession proof, which is why investors might prefer its debt", according to William Larkin, who helps manage $500 million at Cabot Money Management in Salem, Massachusetts. “The food business is less economically sensitive, so it’s the perfect play in this kind of marketplace,” Larkin said. “Could banks have another leg down? It’s possible, if unlikely. Will Kraft be around in 10 years? It’s very likely.”