Friday, March 29, 2024

Fonterra raises 1.25b renminbi in second ‘dim sum’ bond

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Fonterra has raised 1.25 billion renminbi (about NZ$250 million) in its second Chinese currency denominated bond.
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The world’s biggest dairy exporter said it would use the money to repay debt and expand operations in China.

The five-year bonds pay annual interest of 3.6%.

They were bought by global investors, with strong support from Asia, Fonterra chief financial officer Luke Paravicini said.

Fonterra wanted to diversify its funding strategy, with a view to better align borrowing with the company’s business activities, he said.

“We were very pleased with the level of support. It was significantly over-subscribed.”

The funds would be used to refinance some of its existing Chinese operations and to support growth in the Chinese market, he said.

It would be used to expand Fonterra’s consumer, food service, and farming businesses.

Fonterra entered the so-called “dim sum” bond market in 2011, when it sold 300m renminbi of three-year bonds.

The bonds, which paid annual interest of 1.1%, were six times oversubscribed.

At the time Fonterra said that was the lowest coupon achieved for an international corporate issue of Chinese currency deliverable in Hong Kong.

The bonds mature in June this year.

Fonterra president Greater China and India Kelvin Wickham said the bond issue would support growth of the entire business.

It would grow consumer brands in particular, which were a key focus for growth.

Units in the Fonterra Shareholders’ Fund, which gives investors exposure to the company’s dividend stream, were unchanged at $5.70 today.

-BusinessDesk

 

 

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