Fonterra announced late on Thursday it had allocated NZ$800 million of bonds to satisfy demand from institutional investors and broker clients for its six year unsecured senior bond issue. Fonterra had originally said it planned to raise up to NZ$300 million from the retail bond issue. The bond issue is the latest of a 'corporate bond rush' since the introduction of the government's guarantee for banks and finance companies in October last year and the 475 basis point crash in the Official Cash Rate since July. The Fonterra issue brings the total for our 'Bond Rush' list to NZ$1.8 billion inside six months. The bond offered a 7.75% interest rate, well above the 3-4% offered for term deposits by banks and the 5-6% offered by guaranteed finance companies. Fonterra Chief Executive Andrew Ferrier said he was very pleased with the strong response to the offer from such a wide range of NZX primary market participants and institutional investors. "We've had a great response from the New Zealand investor base, which reflects the confidence people have in Fonterra and our business," Ferrier said. Fonterra said there would now not be a public pool for the bond issue. The offer is being joint lead managed by ANZ and BNZ Capital, while the co-managers are ABN AMRO Craigs and First NZ Capital.
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