Fonterra To Tap Hong Kong Bond Market

NEW ZEALAND - Fonterra Cooperative Group, the world’s biggest dairy exporter, will look to tap Hong Kong investors for some 300 million renminbi in its first Chinese currency denominated bond issue.
calendar icon 17 June 2011
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The sale is the first of its kind for an Australasian company in Chinese yuan deliverable in Hong Kong, and the proceeds will be used to support growth in its Chinese business. HSBC will run the book and lead manage the sale.

Fonterra China president Philip Turner said the unit is growing rapidly, and expects to tap second- and third-tier cities over the next three years. It aims to triple the value of its Chinese market to US$70 billion by 2020.

“We see huge potential to expand the breadth of products we offer in China, as well as the geographical distribution of our customer brands and foodservice dairy products,” Turner said in a statement. “We are also exploring opportunities to produce and sell a range of premium value-added dairy ingredients for key customers on the ground in China.”

The sale comes a week after the dairy exporter flagged its first bond issue in Australian dollars. General Manager Treasury Stephan Deschamps said the renminbi issue is part of a strategy to spread its debt across different markets.

Fonterra has a 6,000-cow factory farm at Tangshan, in China and is planning a second such facility. It has agreed to a joint feasibility study with Indian Farmers Fertiliser Co-operative for a pilot dairy farm in India, the world’s second-most populous country after China.

Last month it bought a dairy farm in Brazil, which is expected to start producing milk by late 2014 with a total herd of some 3,300 cows.

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