By LIAM DANN
Fonterra has successfully raised US$165 million ($282m) in a private placement with institutional investors in the United States.
The move was part of Fonterra's strategy to reduce its reliance on short-term borrowing and replace it with a more conservative mix of medium and long-term borrowing, said chief financial
officer Graham Stuart.
It did not mean that Fonterra had acquired extra debt, he said.
Fonterra has reduced debt by $330 million over the past year and refinanced more than $2.3 billion in the past 15 months.
The issue of 12-year unsubordinated notes closed on August 5 more than four times oversubscribed. As a result of the strong demand the issue was increased from US$125 million.
Stuart said the terms compared very favourably with other similar transactions.
The notes were offered at a rate of 0.285 percentage points above the US floating rate benchmark.
First New Zealand Capital's David Smith said that it was a logical move for Fonterra, considering that the United States private placement market was offering good pricing at present.
The private placement market had the advantage of allowing smaller placements than the public market.
If Fonterra wanted to shift its focus to long-term debt, it had little choice but to operate overseas, he said.
There is no demand in New Zealand for debt products with terms longer than 10 years.
The placement was managed by Deutsche Bank.
