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more grist for the mill

Sara Lee Corp.'s change of heart over which division to spin off is shaking the confidence of debt investors.

Credit-default swaps tied to the bonds of the maker of Jimmy Dean breakfast foods and Douwe Egberts coffee have jumped to the highest since Feb. 23 and prices of its debt fell after the company said June 14 it will spin off its beverage business, reversing an earlier plan to divest its meat operations.


Sara Lee has $2.2 billion of long-term debt, including a $300 million euro ($425.1 million) bond that matures in March, according to data compiled by Bloomberg.


The two separated businesses will aim for debt levels of no more than two times earnings before interest, taxes, depreciation and amortization, “consistent with a strong investment-grade company,” according to Brian Weddington, a New York-based analyst at Moody's.

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