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Subject:  Re: Sara Lee Medium Term Bonds Date:  7/9/2011  8:27 PM
Author:  jackcrow Number:  33052 of 37023

I don't see any immediate obvious hazards on the bond or equity end. Fundamentals suggest a "A" rating or tick below. I get estimated fair value of their debt at 6.95% - 7.45%. Ignoring the trading price the yield is trading at a premium for what it is. Which is common across much of the debt market.

Looking at the balance sheet it looks like a large chunk comes due this year. Q/Q long term debt dropped by 296mil, Q/Q short term increased 424mil. Assuming they roll the debt it could "dilute" the longer end pool pushing the price down. Just guessing. Rolling the debt should benefit the company in the long run with current rates being so low. Longer history of accounts payable/accounts receivable did not look upside down to me.

SLE has also been doing some buying and selling of assets which can change investor opinions. Selling of assets can unnerve debt holders.

The reward is most likely on the equity side. 2.34% dividend possible value of $40+. (just spit balling a number working capital can be volatile for some companies and I have looked at SLE's WC history to know if it is volatile and would require some smoothing)

just kicking tires.

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