New Zealand mega-dairy Fonterra this week carried out plans to issue longer-term debt to refinance short-term borrowings.

The cooperative had earlier committed to doing a bond issue in the New Zealand debt market along with a similar-sized US dollar private placement offshore.

The group currently has NZ$270m (US$133.8m) of commercial paper on issue in the local market.

"We're extending our debt maturity profile by refinancing short-term debt, mainly commercial paper, used during the merger, with longer-term debt," Fonterra’s treasurer Mary-Jane Daly told Dow Jones Newswires today [Friday].

The NZ$75m three-year wholesale issue in the New Zealand market was completed today. The 29 November 2005 senior bonds were sold to local institutional investors at a yield of 6.33%, which was a margin of 18 basis points above the New Zealand dollar swap rate, reported Dow Jones.

Also this week, Fonterra confirmed its second private placement in the US dollar market is underway. Market sources said the company is issuing US$25m of floating-rate April 2009 notes paying 42.5 basis points above the three-month London interbank offered rate.

After years of speculation, Fonterra came into being last year through the merger of New Zealand's two biggest dairy cooperatives, New Zealand Dairy Group and Kiwi Cooperative Dairies, and monopoly dairy products exporter the Dairy Board.