Successful placement by KfW of exchangeable bonds due 2013, exchangeable into shares of Deutsche Telekom AG

Frankfurt (ots) - KfW, through a syndicate of banks led by Goldman
Sachs International and Morgan Stanley Bank AG, has successfully
placed EUR 3.0 billion in bonds (the "Exchangeable Bonds")
exchangeable into ordinary shares of Deutsche Telekom AG (the
"Exchange Shares").

The terms of the Exchangeable Bonds, which have a maturity of 5
years and 1 month, have been fixed at a 3.25 % coupon, an exchange
premium of 27.5 % and an exchange price of EUR 14.9341 per Exchange
Share. The bonds are exchangeable into Exchange Shares after the
first coupon payment date after one year and one month. Underlying
the Exchangeable Bonds are 200,882,544 ordinary shares of Deutsche
Telekom AG, or approximately 4.61 % of the company's currently
outstanding share capital. The Exchangeable Bonds are callable by KfW
on or after the third coupon payment date, subject to a 130 % call
threshold, and are redeemable at 100 % of par at maturity.

"In consultation with the Ministry of Finance KfW decided to take
advantage of the currently favourable conditions for equity-linked
instruments to bring an Exchangeable Bond to the market", commented
Dr. Frank Czichowski, KfW's Treasurer. "Demand for high quality
credit in combination with a very liquid underlying allowed us to
print the biggest Exchangeable Bond brought to the market in 2008 so
far."

KfW has agreed to a 180-day lock-up period for its remaining stake
in Deutsche Telekom AG and has granted to two Joint Bookrunners and
Joint Lead Managers, Goldman Sachs International and Morgan Stanley
Bank AG, a greenshoe option for a further EUR 0.3 billion.

DISCLAIMER

THIS ANNOUNCEMENT IS NOT AN OFFER OF SECURITIES FOR SALE IN THE
UNITED STATES. This announcement is not for distribution, directly or
indirectly, in or into the United States or to any US person (as
defined in Regulation S under the US Securities Act of 1933, as
amended). Neither the Exchangeable Bonds nor the Exchange Shares have
been or will be registered under the US Securities Act. The
Exchangeable Bonds and Exchange Shares may not be offered or sold in
the United States absent registration or an exemption from
registration under the US Securities Act. The Exchangeable Bonds and
Exchange Shares may therefore not be offered, sold or delivered
within the United States.

In the United Kingdom, this announcement is being distributed only
to, and is directed only at, qualified investors within the meaning
of Art. 2(1)(e) of the Prospectus Directive ("Qualified Investors")
(i) who have professional experience in matters relating to
investments falling within Article 19(5) of the Financial Services
and Markets Act 2000 (Financial Promotion) Order 2005, as amended
(the "Order") and Qualified Investors falling within Article 49(2)(a)
to (d) of the Order, and (ii) to whom it may otherwise lawfully be
communicated (all such persons together being referred to as
"relevant persons"). This document must not be acted on or relied on
(i) in the United Kingdom, by persons who are not relevant persons,
and (ii) in any member state of the European Economic Area other than
the United Kingdom, by persons who are not Qualified Investors.

Goldman Sachs International and Morgan Stanley Bank AG are acting
for KfW and no one else in connection with the issue of the
Exchangeable Bonds and will not be responsible to any other person
for providing the protections afforded to their respective clients,
or for providing advice in relation to the proposed issue.

In relation to each Member State of the European Economic Area
whose national law sets out the requirement for KfW as an Issuer to
publish a prospectus prior to public offering of the Bonds (each a
"Relevant Member State"), each Manager has represented and agreed,
that it has not made and will not make an offer of the Bonds to the
public in that Relevant Member State prior to the publication of a
prospectus in accordance with the applicable national laws and
regulations. Stabilisation: EC Regulation 2273/2003, German law / FSA

Features

Issuer: KfW

Rating: AAA (Fitch Ratings) / Aaa (Moody's) / AAA (Standard &
Poor's) Amount: EUR 3,000,000,000 Maturity: 27. May 2008 - 27. June
2013 Coupon: 3.25 % p.a. Issue price: 100 % Exchange Premium: 27.5 %
Exchange Price: EUR 14.9341

Issuer Call:

On or after the 3rd coupon payment date after 3 years and 1 month
subject to a 130 % call threshold

Dividend Protection: Above 5 % dividend yield

Selling Restrictions: Institutional private placement, Reg S only,
no Rule 144a No sale in the US or to investors in Canada, Australia
or Japan Sales to institutional investors only in Austria, France,
Germany, Greece, Italy, Netherlands, Portugal, Spain and UK as per
market practice and applicable securities law

Listing: Frankfurt

WKN: A0E9DE ISIN: DE000A0E9DE7

Joint Lead Managers (2):

Goldman Sachs International Morgan Stanley Bank AG

Co-Lead Manager(1):

Lehman Brothers International (Europe)

Co-Manager (6):

BNP PARIBAS Citigroup Global Markets Limited Deutsche Bank
Aktiengesellschaft Dresdner Bank Aktiengesellschaft JP Morgan
Securities Ltd. Merrill Lynch International

Originaltext: KfW
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For further information please contact:
Dr. Charis Pöthig
Tel.: +49 (69) 7431-4683
E-Mail: charis.poethig@kfw.de

KfW, Palmengartenstraße 5-9, 60325 Frankfurt
Kommunikation (KOM)
Tel. 069 7431-4400, Fax: 069 7431-3266,
E-Mail: presse@kfw.de, Internet: www.kfw.de