Fonterra Issues Renminbi Bond to Support China Growth
Fonterra Co-operative Group Limited announced today it has raised 1.25 billion Chinese renminbi (approximately NZD250
million) through a 5 year “dim sum” bond issue (Chinese renminbi raised offshore) as part of its ongoing commitment to
developing its China business.
Fonterra Chief Financial Officer, Lukas Paravicini, said the funds raised from the dim sum bond issue will be used to
further strengthen and support the growth of Fonterra’s businesses in China.
“Along with refinancing some of our existing China operations, we will also be using funds to support further growth in
this market. This will include the further expansion of our consumer, foodservice and farming operations,” he said.
Fonterra President Greater China & India, Kelvin Wickham, said the co-operative has had a strong focus on driving growth in both volume and value as it
develops its integrated business model in China.
“Last year we successfully launched our premium milk brand, Anchor, and also launched a new paediatric formula product
specially tailored for the China market under the Anmum brand.
“At the same time China is expected to see a continued gap between the demand and supply of raw milk so our farming
business will continue to build supplies of quality raw milk to meet local consumer demand.
“Our well-established foodservices and ingredients businesses, which import quality products from New Zealand, are also
expecting to see continued growth in the coming years.
“The renminbi bond issue will support the growth of our whole business, and in particular our consumer brands business
which are a key focus for growth given it is at an earlier stage of development,” Mr Wickham said.
Mr Paravicini added that the decision to issue the dim sum bonds is part of Fonterra Treasury’s diversified funding
strategy. This comprises a combination of bank facilities and debt capital market bonds, which currently includes bonds
denominated in New Zealand Dollars, Australian Dollars, US Dollars, Renminbiand Sterling.
“The dim sum bond market has continued to develop strongly over recent years and provides an attractive opprotunity for
us to raise long term renminbi funding that matches our businesses in China. As this funding market and our business in
China develop further, it makes sense to seek a greater alignment between our treasury borrowing and our business
activities,” Mr Paravicini said.
This is the second time Fonterra has issued bonds denominated in Chinese renminbi. The first time was in 2011 when it
became the first Australasian company to tap the dim sum market.
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