New Zealand's Fonterra Co- operative Group Limited, the world's biggest dairy company, announced Friday that it is seeking to raise 300 million yuan ( approximately 42 million U.S. dollars) through a bond issue in Hong Kong.
It marked the first Australasian corporate to tap Hong Kong bond market in Renminbi currency.
The two-year bond will carry an annual coupon rate of 1.1 percent with a maturity date of June 27, 2014.
Fonterra's General Manager Treasury, Stephan Deschamps said the decision reflected the growing importance of China to Fonterra's business operations.
"As our business with Chinese customers expands, it makes sense to seek a greater alignment between our Treasury borrowing and our business activities."
Deschamps said the bond issue represents a further diversification in Fonterra's Treasury strategy. Fonterra already has debt denominated in U.S. dollars, New Zealand dollars, Euro, Sterling and Japanese Yen.
Fonterra China President Philip Turner said the funds raised from the bond issue would be used to support the growth of Fonterra's China business, based in Shanghai.
Turner said Fonterra forecasts show the China dairy market is on track to triple in value from around 22 billion U.S. dollars in 2009 to 70 billion U.S. dollars by 2020.
HSBC acts as the Bookrunner of Fonterra's bond issue. The bank' s New Zealand CEO David Griffiths said Fonterra was leading the way as a New Zealand corporate in using Renminbi for its general corporate funding, and was just one example of the growing number of New Zealand companies using Renminbi for business-related purposes.
