We have an unusual chart about what the market is thinking about the 16 bln USD cash and stock offer from Kraft for Cadbury. The credit default swap spread for Kraft in the 5 years is jumping. A normal reaction to new that an already indebted company plans to load his balance sheet with even more debt. This spread will only widen because Kraft will be pushed to sweeten the offer or to tolerate another bidder.
Who could that be? The CDS market gambles on Hershey rather than on Nestlé, even though Nestlé has seen as the most viable alternative bidder.
Intriguing.
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