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Fonterra sets minimum rate for 6-yr bonds at 7.75%

Fonterra sets minimum rate for 6-year bonds at 7.75%

Feb. 3 - Fonterra Cooperative Group, the world’s biggest exporter of dairy products, set the minimum interest rate on its 6-year bond offer at 7.75%, a rate high enough to lure investors faced with waning returns from bank deposits.

The NZ$300 million offer opens on Feb. 9 and closes on March 6, with Fonterra retaining the right for unlimited oversubscriptions, it said in a statement today. The final interest rate paid will be set on March 9 at the higher of either 7.75% or the six-year swap rate plus 3.4%.

The bonds “offer gave retail investors the opportunity to earn an attractive yield on a fixed-rate investment backed by the company very much at the heart of New Zealand’s dairying industry,” chairman Henry van der Heyden said. Fonterra is “in a position to capitalise on the expected long-term growth in demand for quality dairy products in emerging and established economies around the world.”

Fonterra joins companies including Fletcher Building in tapping demand for fatter yields as interest rates slide. The nation’s biggest construction company in November offered NZ$100 million of 2014 and 2016 notes offering 9% annual interest.

Yesterday, state-owned Meridian Energy offered to sell fixed-rate notes maturing in 18 months or less at interest rates between 5% and 5.25%. 18-month notes pay 5.25%.

According to the website, Fisher & Paykel Finance has five-year secured debentures paying 7.25% for up to NZ$5,000, while a three-year term deposit at ANZ Bank offers 3.5%. National Bank’s Thoroughbred Saver savings account pays 2.75%. All three come under the deposit guarantee scheme.

The minimum investment in Fonterra’s A+ bonds is NZ$5,000 with NZ$1,000 increments.

ANZ Bank and BNZ Capital are managing the sale with ABN Amro Craigs and First NZ Securities.


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