Fonterra Cooperative Group, the world's biggest dairy exporter, has raised 1.25 billion renminbi (NZ$247 million) in its second Chinese currency denominated bond, which it will use to repay debt and expand operations in the world's second-biggest economy.

The five-year bonds pay annual interest of 3.6 per cent, and were bought by global investors "with strong support from Asia," chief financial officer Luke Paravicini said in an emailed statement to BusinessDesk. Fonterra wants to diversify its funding strategy with a view to better align borrowing with the company's business activities.

"We were very pleased with the level of support," Paravicini said. "It was significantly over-subscribed."

The funds will be used to refinance its some of its existing Chinese operations, and to support growth in the Chinese market, expanding Fonterra's consumer, foodservice and farming businesses.

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Fonterra first entered the so-called 'dim sum' bond market in 2011, selling 300 million renminbi of three-year bonds which were six times oversubscribed paying annual interest of 1.1 per cent. At the time, Fonterra said that was the lowest coupon achieved for an international corporate issue of Chinese currency deliverable in Hong Kong. The bonds mature in June this year.

Kelvin Wickham, Fonterra president Greater China & India, said the bond issue will support growth of the whole business, and consumer brands in particular, "which are a key focus for growth given it is at an earlier stage of development."

Units in the Fonterra Shareholders' Fund, which gives investors exposure to the company's dividend stream, were unchanged at $5.70 today.