Bonds in China

Fonterra has raised 1.25 billion Chinese renminbi (about $NZ250 million) through a five-year ''dim sum'' bond issue, to strengthen and support its China business.

Along with refinancing some of its existing China operations, it would also be used to support growth, including the further expansion of its consumer, foodservice and farming operations.

The decision to issue the dim sum bonds was part of Fonterra treasury's diversified funding strategy, chief financial officer Lukas Paravicini said.

That comprised a combination of bank facilities and debt capital market bonds, which currently included bonds denominated in New Zealand, Australian and US dollars, renminbi (yuan) and sterling.

It was the second time Fonterra had issued Chinese-denominated bonds.

The first was in 2011, when it became the first Australasian company to tap the dim sum market.

Demand for dairy nutrition in China was expected to double in the next 10 years.

Fonterra president, greater China and India, Kelvin Wickham said the co-operative had a strong focus on driving growth in both volume and value as it developed its integrated business model in China.

Last year, it launched its milk brand Anchor, along with a new paediatric formula product, specially tailored for the Chinese market, under the Anmum brand.

China was expected to experience a continued gap between the demand and supply of raw milk, so its farming business would continue to build supplies of raw milk to meet local consumer demand, Mr Wickham said.

It was expanding its farming operations, with the target of producing up to one billion litres from 30 farms in China by 2020.

Its well-established food-services and ingredients businesses were expected to continue to grow in the coming years.

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