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Subject:  Re: Sara Lee Medium Term Bonds Date:  7/9/2011  9:57 PM
Author:  charliebonds Number:  33055 of 37023

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


That’s a shrewd observation, and it might be a sufficient explanation of the bond-price wobbles. But I’d disagree with your estimate that “Fundamentals suggest an "A" rating, or tick below”. Or, better, even the briefest comparative work suggests that Sara Lee’s debt should be rated lower than where it is. At every step in its yield-curve, it offers a few more basis points than its industry peers.

Something’s going on. I don’t know what. But a would-be buyer ought to be worried, because the situation is the worst of both worlds, as is often the case with triple-BBBs. They carry an investment-grade rating, but they really aren’t invest-grade debt. They are junk bonds in disguise that don’t offer a proportionate reward. I HATE triple-BBBs compared with the honesty and much fatter yields of an honest double-BB.

There is hidden risk somewhere in Sara Lee, but not (yet) enough basis points of reward to accept the risks of its debt. (IMHO, 'natch)

Due YTM Issue
Baa2 BBB- 11/01/11 0.10% Kraft Foods Inc
Baa2 BBB 03/15/12 0.13% Heinz H J Fin Co
Baa2 BBB- 06/01/12 0.38% Kraft Foods Inc
A3 BBB+ 12/03/12 0.65% Kellogg Co
A2 A 12/03/12 0.41% Campbell Soup Co
Baa2 BBB- 02/11/13 0.91% Kraft Foods Inc
A3 BBB+ 03/06/13 0.71% Kellogg Co
Baa1 BBB 06/15/13 1.35% Sara Lee Corp
Baa2 BBB 07/15/13 0.79% Heinz H J Co
Baa2 BBB- 10/01/13 1.09% Kraft Foods Inc
A2 A 10/01/13 0.74% Campbell Soup Co
A1 A+ 02/15/14 0.91% Unilever Capital Corp
Baa2 BBB- 02/19/14 1.33% Kraft Foods Inc
Baa1 BBB 09/15/15 2.50% Sara Lee Corp
Baa2 BBB- 02/09/16 2.32% Kraft Foods Inc
A1 A+ 02/10/16 1.84% Unilever Capital
A3 BBB+ 05/30/16 2.27% Kellogg Company
Baa1 BBB+ 02/15/17 2.55% General Mills Inc
A2 A 07/15/17 2.27% Campbell Soup Co
Baa2 BBB- 08/11/17 3.00% Kraft Foods Inc
A3 BBB+ 05/21/18 2.93% Kellogg Co
Baa2 BBB- 08/23/18 3.50% Kraft Foods Inc
A3 BBB+ 11/15/19 3.50% Kellogg Co
Baa2 BBB- 02/10/20 3.86% Kraft Foods Inc
Baa1 BBB 09/15/20 4.49% Sara Lee Corp
A3 BBB+ 12/15/20 3.81% Kellogg Co
A1 A+ 02/10/21 3.53% Unilever Capital Corp
A2 A 04/15/21 3.74% Campbell Soup Co
A3 BBB+ 04/01/31 5.10% Kellogg Co
Baa2 BBB- 11/01/31 5.20% Kraft Foods Inc
Baa2 BBB 03/15/32 5.42% Heinz H J Fin Co
Baa1 BBB 11/01/32 6.48% Sara Lee Corp
A1 A+ 11/15/32 4.57% Unilever Cap Corp
Baa2 BBB- 08/11/37 5.53% Kraft Foods Inc
Baa2 BBB- 02/01/38 5.55% Kraft Foods Inc
Baa2 BBB- 01/26/39 5.55% Kraft Foods Inc
Baa2 BBB- 02/09/40 5.48% Kraft Foods Inc
Baa1 BBB+ 06/15/40 5.10% General Mills Inc

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