NORTHFIELD, Ill. (

TheStreet

) --

Kraft Foods

(KFT)

is in talks with two banks to set up about $8 billion in financing for its offer to buy

Cadbury

(CBY)

, a report says.

Bloomberg

reports

Citigroup

(C) - Get Report

and

Deutsche Bank

(DB) - Get Report

are working on setting up debt financing to cover about half of Kraft's offer to buy Cadbury. The news agency cited two people with knowledge of the matter.

The financing would consist of a bridge loan to be repaid with the proceeds of an investment-grade bond offering, one of the people said,

Bloomberg

reports. Bank officials declined to comment.

The

Wall Street Journal

reports Kraft is working to arrange financing and firm up its proposal, which could take as much as six weeks.

Kraft made its $16.7 billion offer to buy the U.K. candy maker on Monday but Cadbury swiftly rejected the offer saying it "fundamentally undervalues" Cadbury and its prospects.

Analysts say Kraft may have to raise its offer after Cadbury's board rejected it as too low.

Moody's Investor Service, meanwhile, said it may downgrade the debt rating of Kraft, following its bid to Cadbury. Kraft's Baa2 long-term rating and Prime-2 short-term rating are under review.

Moody's Tuesday said Kraft's debt metrics are already weak and a buyout of Cadbury would require Kraft to take on more debt. Moody's also noted that Kraft may need to raise its bid to close the deal.

-- Reported by Joseph Woelfel in New York

.

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