Frankfurt (ots) -
– Strong global demand for liquid benchmark bonds in EUR and USD
– Access to long-term funding and extension of currency range
– 2013: EUR 70-75 billion to be raised
To fund its promotional business KfW issued bonds via more than 200 individual transactions in 15 different currencies (as of 30 November 2012), raising approximately EUR 78.4 billion in the international capital markets.
“We pursue a consistent, globally-oriented and strategic funding policy complemented by the guarantee of the Federal Republic of Germany for all our bond issues. This combination allows us to fund at competitive rates even in a difficult market environment, which has significant beneficial consequences for KfW’s promotional lending activity,” explained Dr Günther Bräunig, member of the Executive Board of KfW Bankengruppe in charge of capital markets, on the occasion of the promotional bank’s capital market press conference in Frankfurt.
This year international investors again showed their preference for liquid bonds. KfW’s offer of altogether 12 high-volume benchmark bonds in EUR and USD thus met with strong global demand. With a total volume in the equivalent of around EUR 46 billion, this premium product of KfW attained a share of about 59% of total funding. KfW is the only issuer in this market segment that was able this year to offer the complete maturity range up to 10 years in EUR and USD.
Bonds in EUR and USD accounted for a share of about 81% (approx. 49% EUR, approx. 32% USD), again building the basis for funding in 2012. Other currencies accounted for about 19% or the equivalent of nearly EUR 15 billion in funding; in particular demand were bonds in GBP (equivalent of about EUR 5.2 billion), AUD (about EUR 4.2 billion), JPY (about EUR 1.4 billion) and SEK (about EUR 800 million). “The range of currencies that we offer helps diversify our funding while also expanding our product range and therefore our investor base,” explained Bräunig. A highlight of these diversification efforts was the issuance of KfW’s first bond in Chinese renminbi in Hong Kong. This ‘Dim Sum bond” enabled KfW to expand its product range in a promising market segment.
International demand for KfW bonds continues to rise:
– Compared to last year, Asian investors purchased almost twice as
many Euro Benchmarks.
– On average, 46% of USD bonds – in individual transactions even
nearly 80% – were placed with central banks.
– Bank treasuries, looking for low-risk liquid securities, have
been gained as long-term KfW investors.
These figures show that trust in KfW by a steadily increasing number of institutional investors is continuously growing.
Further progress in privatisation of Deutsche Post AG
KfW took advantage of the favourable environment on the stock markets in September to continue the privatisation of Deutsche Post AG. By successfully placing 5.0% of its existing share capital, the free float increased to 74.5%; KfW’s share is now 25.5%. In coordination with the Federal Ministry of Finance, KfW will continue monitoring the market and take additional privatisation steps dependent on market developments.
Funding 2013: Outlook and Challenges
For the coming year KfW is expecting a funding volume of EUR 70 to 75 billion. The slight decline compared to 2012 is due to expected higher off-schedule loan repayments with continuing low interest rate levels in 2013. In addition, there are fewer KfW bonds maturing next year.
Currently the market environment can be described as strained but by and large calm, primarily thanks to the measures taken by the central banks. 2013 will again be a challenging year for the euro area, although the launch of the ESM is an important step to prevent extreme volatilities in the capital markets in the future.
“We want to continue to be interesting and attractive to our investors in 2013. Therefore we continuously challenge ourselves and apply an intelligent issuing policy in order to remain successful even in difficult markets. We are adhering to our core strategy for funding: acting flexibly and considerate in terms of the time of issue, volume, product range and currency. In this way we will further define our profile as a responsible, modern and investor-oriented issuer,” said Bräunig.
KfW and its funding strategy are well established with both investors and banks. The combination of an explicit, direct government guarantee, a solid capital base and a proven business model will continue to convince the markets, allowing the promotional bank to start the new year with confidence.
– KfW awarded as ‘Kangaroo Issuer of the Year 2012′:
KfW, Palmengartenstraße 5-9, 60325 Frankfurt
Kommunikation (KOM), Nathalie Drücke,
Phone: 069 7431 2098, Fax: 069 7431 3266,
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