Fonterra issues Australian dollar bonds for the first time

Fonterra has today announced it has successfully raised AU$300 million (NZD $388.3 million) through its first ever issue of corporate bonds in Australia.

The bonds are for a five year term, maturing in July 2016. They were priced at a spread of 100bp over swap.

The bonds were issued by an Australian subsidiary, guaranteed by Fonterra Co-operative Group Limited. They are expected to be rated A+ by Standard & Poor’s and AA- by Fitch, consistent with the agencies’ current ratings for Fonterra Co-operative Group Limited.

General Manager Treasury Stephan Deschamps said the bond proceeds would be used to refinance bank debt in Australia.

“Fonterra has a large business in Australia and it makes sense for us to seek a greater alignment between our funding activities and our asset base,” he said.

“Fonterra has not participated in the AUD corporate bond market previously and we are pleased with the strong demand from institutional investors.”

The AUD bond issue comes just a fortnight after Fonterra successfully entered the Chinese currency bond market, raising 300 million yuan (approximately US$42 million or NZ$56 million) through an issue of RMB denominated bonds.

“The strong interest in both of these recent bond issues demonstrates how Fonterra’s business profile and financial strength are well regarded by international investors,” Mr Deschamps said.