BEIJING - Bright Food Group Co plans to join Unilever NV in selling yuan-denominated bonds. That will cap a record 12 months of sales by food companies, as poisoning scandals and rising wealth accelerate expansion by larger companies in China.

Shanghai's biggest dairy producer, and the maker of "White Rabbit" candy, may raise 3 billion yuan ($460 million) by selling bonds, Bright Food Chairman Wang Zongnan said in an interview this month.

Three-year bonds sold last month by COFCO Ltd, the State-grain trader, yield 155 basis points more than Chinese government securities, compared with a spread of 84 basis points for Kraft Foods Inc.

Food companies have raised 6.5 billion yuan in 13 bond sales over the past 12 months, compared with 1.6 billion yuan in two offerings in the previous three years.

Chinese companies have sold 640 billion yuan of bonds so far this year, a record annual start.

COFCO paid 4.86 percent to sell three-year bonds in March, compared with the 1.785 percent for similar-maturity debt sold by Kraft Foods.

China's retail sales have jumped 18.4 percent over the past year and the nation overtook Japan as the world's second-largest economy in 2010. Bright Food is raising funds to buy companies at home and overseas in industries including sugar, dairy, and food production and distribution.

"The funds raised will mainly be used for increasing capacity, acquisitions, research and development," Wang said. The company isn't considering a sale of so-called dim sum bonds in Hong Kong, as such offerings require regulatory approval and demand is strong for bonds on the Chinese mainland, Wang said.

Bright Food lost a bid to buy 50 percent of the French yogurt maker Yoplait France SA last month.

On March 18, General Mills Inc said that it was in exclusive talks to buy the stake. Bright Food inquired last year about acquiring GNC Holdings Inc, the Pittsburgh, Pennsylvania-based retailer of vitamins and supplements that raised $360 million in an initial public offering.

Hangzhou Wahaha Group, China's third-biggest soft-drinks maker, said on March 6 it is considering buying a Japanese yogurt maker.

"The food industry in China is seen as fairly stable from a bond point of view, compared with industries such as steel, and their stock is considered non-cyclical as everyone needs to eat," said Yang Guibin, a bond-fund manager at the Shanghai-based Fullgoal Asset Management Co, which manages about 62.5 billion yuan in assets.

Bloomberg News

(China Daily 04/13/2011 page16)