Fonterra uses RMB bond to drive China business

New Zealand's Fonterra, the world's biggest dairy company, announced Tuesday it had raised 1.25 billion yuan ($207.61 million) through a five-year "dim sum" bond issue - Chinese renminbi raised offshore - in order to develop its China business.

Fonterra Co-operative Group chief financial officer Lukas Paravicini said the funds would be used to refinance some existing China operations and to support growth, including expansion of consumer food service and farming operations.

The decision to issue the dim sum bonds was part of Fonterra's diversified funding strategy, Paravicini said in a statement.

"The dim sum bond market has continued to develop strongly over recent years and provides an attractive opportunity for us to raise long term renminbi funding that matches our businesses in China," he said.

Fonterra President for 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.

"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," Wickham said in the statement.

"Our well-established food services and ingredients businesses, which import quality products from New Zealand, are also expecting to see continued growth in the coming years."

It was Fonterra's second issue of renminbi-denominated bonds. The first time was in 2011.