KfW defies challenging market

Frankfurt (ots) -

- First-class credit quality offers investors worldwide a safe
haven
- Funding volume to increase slightly in 2008
- Sustainable management of KfW's financial investments

In the first half of 2008 KfW successfully defied the very
volatile international capital markets with its funding strategy.
This was stated by Dr. Frank Czichowski, treasurer of KfW
Bankengruppe, at today's press conference in London on the German
credit institution's capital market activities.

KfW funds its promotional lending business by issuing debt
instruments, and at the end of 2007 it had expected funding needs of
around EUR 70 billion for this year. Despite good news from the
German economy, the market environment has been considerably more
difficult than in the past as a result of the financial market crisis
with all the related turbulence and pronounced volatility. "A
flexible and transparent funding strategy has always been KfW's
trademark; beyond this the key to success this year lies in diligent
timing for debt issues as well as in choosing the proper maturity,
and in what has been confirmed by market observers to be a wary and
fair pricing of KfW securities", explained Czichowski.

In the first six months of this year KfW has already raised EUR
46.9 billion in over 200 individual transactions in 22 different
currencies; this is the liveliest funding activity ever in a
comparable period of time. The main currencies were the euro (16.9
billion, 36%) the US dollar (equivalent of EUR 16.7 billion, 36%) and
the pound sterling (equivalent of more than EUR 8.3 billion, 18%),
which has firmly established itself as the third core currency.

Eight benchmark bonds were issued in the first half alone. In the
euro segment a 3-year and a 10-year benchmark were issued in a volume
of EUR 5 billion each. In the USD segment KfW issued global bonds of
3-, 5- and 10-years twice, with volumes of no less than USD 3 billion
each. Thus, more than 50% of the funding in the first six months is
made up of large-volume and highly liquid benchmark bonds in euros
and US dollars in the equivalent of around EUR 23.8 billion. "Our
benchmark programmes have proven their value as the most important
pillar of our funding strategy. In the difficult current market
environment international investors appreciate KfW's first-class
credit quality, and they can rely on the performance of our bonds",
declared Czichowski.

Furthermore, the five-year bond exchangeable into ordinary stock
of Deutsche Telekom AG which was issued in May received great
attention, successfully continuing the federal government's and KfW's
privatisation of the enterprise. This issue aroused great interest
among institutional investors and also impressed many market players
with its volume of EUR 3.3 billion.

Premature repayment of USD bonds and follow-up financing increases
funding volume slightly to around EUR 75 billion

The mid-year review of annual funding needs performed regularly by
KfW has led to a slight increase in the funding volume from around
EUR 70 billion to now EUR 75 billion. "As the interest level has
declined, particularly in the USA, this year there will be
increasingly more premature repayments of callable US dollar bonds.
We plan to make follow-up funding transactions for these bonds. This
will slightly increase our funding needs by a total of around EUR 5
billion", explained KfW's treasurer.

Looking back on the successful first half of the year Czichowski
expressed optimism that KfW will well manage the funding of the
remaining approximately EUR 28 billion. The focus of KfW's
international capital market activities will continue to be the euro
and the US dollar; the pound sterling, the Japanese yen and numerous
niche currencies in which KfW offers investors debt instruments will
also play their important part in the funding.

A strategically important novelty was introduced by KfW in the
first quarter of this year by adopting sustainability criteria in the
management of its own financial investments. The bank had committed
itself to apply these criteria by signing the UN Initiative
"Principles for Responsible Investment" (UN-PRI). KfW now bases its
investment decisions for its own liquidity portfolio not only on the
still important credit quality criterion but also on a sustainability
rating and gives preference to issuers that meet the sustainability
criteria established by KfW. In preparing this rating KfW cooperates
with the sustainability rating agency "Scoris GmbH". "Sustainability
as a central theme that guides the promotional activities and KfW
Bankengruppe itself has thus also found its way into our capital
market activities. We also hope that this step will further enhance
the acceptance and implementation of the UN-PRI within the investment
industry", said Czichowski.

For more information on KfW's funding and sustainable financial
investment management please go to
http://www.kfw.de/EN_Home/Presse/Press_Conferences/index.jsp and
http://www.presseportal.de/go2/Socially_responsible_investment

Originaltext: KfW
digital press kits: http://www.presseportal.de/pm/41193
press kits via RSS: http://www.presseportal.de/rss/pm_41193.rss2

Pressekontakt:
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