If Fonterra is able to:

raise money on international money markets at a "very attractive funding cost"

why are they pissing around with $100 million of retail bonds?

............ ah haaaaaaaaaa , stop it , you two . I'm gonna wet me nappies ! Aha haaaaaaaaaa ..............

Your on to it - much more chance of getting a bail-out if you can show a few Mum and Dad investors stand to lose their investments rather than just faceless Fund Managers and Corporate Dairy investors.

Personally I would not be touching corporate debt of any sort for the forseeable future. Round 2 is starting shortly and anything connected with the 'd' word will not be a good place to be.

LOL

i think you will find Fonterra is also investing in Brazil. How this helps NZ dairy farms confuses me. They should borrow more to prop up the payments in Aussie as well. Aussie farmers are unimpressed with Fonterra's payout across the ditch where its more like $4.00 a kg.

casual observer,

Interesting thoughts regards China. I strongly suspect Fonterra's relationship with China is at least facilitated on a government to government basis, but how Fonterra assisting Chinese dairy production helps the long term future of NZ dairy farming is not obvious.

And then Andrewj posted this link suggesting China is withdrawing from risky investments:
http://www.telegraph.co.uk/finance/china-business/7205110/China-orders-r...

Maybe the Govt underestimated its liability under the deposit guarantee? Maybe time for some serious dairy farm sales at Auction so we can truly gauge demand for farms and prices buyers are willing to pay. They need to be cash buyers today mind you ,no finance companies out there to prop up the market with %80 finance and stock on top.

pwilkie,

SCF certainly doesn't look good in your link:
http://business.scoop.co.nz/2010/02/11/south-canterbury-faces-1-1b-redem...

$1.7 billion of assets.

Some equity and prior charges of $152 million.

$250 million of bonds that expire after the guarantee.

$1.142 billion to rollover before the guarantee ends in October.

How much money does that leave being rolled over beyond October?

So little it doesn't matter.

Investors have continued to demonstrate confidence in SCF and Hubbard, with about 55% of deposits rolling over after release of a new prospectus in October.

Wrong. Investors have not demonstrated confidence in SCF and Hubbard - only in the guarantee.

here,s a picture for you farmer guy,s--anyone u know?--no offence intended
http://www.aussiestockforums.com/forums/attachment.php?attachmentid=1485...

... but how Fonterra assisting Chinese dairy production helps the long term future of NZ dairy farming is not obvious.

But if the relationship is facilitated on a government to government basis - the tit for tat benefit to NZ may not be directly targetted at dairy. JK's got that pet interest in promoting NZ as the financial services 'hub' of the South Pacific. This from his statement to Parliament;

.. there is an opportunity for New Zealand to become a hub for financial services in the Asia Pacific region, specialising in providing high-value middle and back office functions for the funds management industry. The Government is keen to see if this or similar new industries could be developed here and we have asked officials to determine what steps we would need to take to make that a reality.

Yep, Peter, dear old Roger D had the same clever idea way back when... and if I recall he was also gonna sell all our roads to these big money rollers we were going to be servicing (or was that Maurice who had that great brainstorm)?

Game musical debt chairs for Fonterra, all good whilst they can find the next mug to service their perpetual revolving line of credit when a chunk comes due, but oneday if they cant, suddenly their ain't enough chairs, but don't worry it would be deemed to big to fail probably and the old taxpayer will be pushed into the breech to repair it for listing on the foreign exchange for companies.

Re. the debt-equity ratios, interesting to note that one of the key reasons for moving their year-end from the dairy season of 31.May to 31.July was for balance sheet reasons. At 31.July, the amount of receivables and inventory on the balance sheet they need to fund is significantly lower, due to it being the winter season.
Hence, we should have seen a significant improvement in the debt-equity ratio. If this has not happened, we should be concerned.

With the discussions about Fonterra's interest in China, I have done a little reading and found one article that may be of interest where Philip Turner managing director for Fonterra China said, "we are confident that with further investment in good technology, people and high quality genetics, we can replicate this model on further farms. This will complement our New Zealand milk supply and help us better meet the needs of our key customers, who are increasingly looking for local sourcing capability."

Here is the link: http://www.drinks-business-review.com/news/fonterra_to_invest_in_two_mor...

Emma ''This will complement our New Zealand milk supply and help us better meet the needs of our key customers, who are increasingly looking for local sourcing capability." When the melamine issue broke, NZ milk was used to supply these key customers - especially for baby formula. Consequently payout for Fonterra suppliers rose. Now it appears that 'local supply' is now preferred - on whose directive? I'm guessing from those on high who see these farms as providing work for the rurally disadvantaged and potentially rebellious. I wager payout to Fonterra suppliers will drop once their milk is no longer being turned into these high value products, but sent back to the commodity market. Is Fonterra now caught on the 'China Hampster Wheel'?

Fonterra is launching via Sky TV a series of documentaries to give suppliers 'a better understanding of our strategy'. Methinks not a lot of suppliers are convinced of the need for Fonterra to be farm owners in China. That this series is coming out now seems just a little too coincidental.