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Back to reality for Fonterra note holders

Fonterra has cut the interest rate on its NZDX-listed perpetual capital notes to 4.83% from 8.74% to reflect the lower official cash rate.

The dairy co-operative has $35.1 million worth of perpetual capital notes on issue.

The decrease is based on an almost 4.00% fall in the one year government stock rate since July last year, Fonterra said today, adding that the margin portion of the interest rate remains unchanged at 1.80%.

“This decrease is due to the RBNZ's cuts in OCR as a reaction to the global recession, cuts which have created a lower interest rate environment.”

The next quarterly interest payment on the notes is due to be made on 12 October 2009 to those holders registered on 2 October 2009.

Under the terms on which the perpetual capital notes were issued, the
interest rate is reset on 10 July each year.

More by Duncan Bridgeman

Comments and questions

What planet does Fonterra live on? Certainly not NZ where everyone from the local Dentist to the Reserve Bank Governor has been complaining about high interest rates!
This will serve one purpose only. To lift Fonterras profit at the cost of all the retired cockies who have saved their retirement funds in such Notes.
I am getting a higher rate from my normal commercial Bank! Shame on you Fonterra!

Bout time they stopped being santa clause with our money. We need a higher payout very soon so we can pay our employees and meet our commitments, ie break even.cant feed ourselves on topsoil

it is time the reserve bank & govt started thinking about savers & our lousy savings rate!
stop cutting interest rates!!

You have to watch Perpetuals.

ABNAMROCRAIGS commented on this Perpetual some months ago,and gave the opinion that the interest rate would be reset at 5.02%.

Consequently they were not recommending it.