KfW optimistic about its capital market activities in the second half of 2009

Frankfurt (ots) -

Over EUR 50 bn refinanced under difficult market conditions in the
first two quarters
Simply structured securitisations still important for the credit
supply of SMEs

"Although funding via capital markets in the first half of 2009
was not a walk in the park even for big international issuers, the
last six months show how well KfW is positioned in the global
markets", says Dr Günther Bräunig, member of the Managing Board of
KfW Bankengruppe on the occasion of the half-yearly press conference
on the capital market activities of the major German promotional
bank, which is held in London today.

Particularly the first three months were more than challenging.
Numerous state-guaranteed bonds issued by banks pushed onto the
market and the issue of government bonds rose sharply as well. At the
same time, many central banks - typical core investors of KfW - had
fewer reserves to invest as a result of the financial crisis and a
number of institutional investors took time out to reassess their
risk appetite. In the first quarter this led to a new, significantly
higher price level also for sovereign, quasi-sovereign and
supranational issuers. The situation eased in the second quarter,
however, as investors were increasingly willing to invest, also
because the supply of new government-guaranteed bonds did not flood
the market to the extent expected.

KfW successfully refinanced its promotional business even under
these difficult circumstances. In the first half of the year KfW
raised EUR 51.2 billion in the international capital markets - two
thirds of the volume announced for 2009. Over 220 issues in
altogether 15 different currencies were placed in the market. The
euro (43%) and the US dollar (39%) accounted for the biggest shares
while the pound sterling took 7% and the Japanese yen 5%.

KfW was the only issuer in its segment to issue large-volume bonds
in all benchmark maturities (three, five and ten years). So far the
bank has raised equivalent of EUR 29.5 billion under its benchmark
programmes (eight new issues and two increases). "Our issuing
activity in long maturities is all the more noteworthy as in volatile
times, risk-conscious investors tend to look for paper with short
maturities. We nonetheless succeeded in issuing ten-year benchmark
bonds in a record volume of EUR 6 billion and USD 3 billion -
impressive evidence of the confidence which institutional investors
have in KfW's issuance strategy and credit quality!", emphasises
Bräunig.

This success was helped by the fact that KfW has reorganised its
marketing for large-volume Euro benchmark bonds. The investor
relations activities in Germany and Europe, for example, were
expanded. Moreover, banks with particularly strong regional
distribution power were increasingly contracted as syndicate members.
As a result, the share of domestic investors more than doubled
against 2008 in the first half of 2009. A similar trend could be
observed for US dollar bonds. The average share of US investors has
also doubled. "It pays to regularly and comprehensively inform our
core investors and to woo new investors. We continue to offer highly
liquid bonds, and this is of high importance to them", says Bräunig.

What was initially cautious demand for public and foreign currency
bonds outside the benchmark programmes as well as for structured
securities picked up noticeably in the second quarter. Investors have
been showing greater willingness to take risks in regard to currency,
maturity and issue structure; however, they continue to keep a close
eye on the issuer's credit quality.

The promotional bank is holding on to the funding volume of around
EUR 75 billion announced in January for 2009. For the latter half of
the year it maintains its forecast of an occasionally uncertain and
volatile market environment. "The past months have shown, however,
that our market presence enables successful issues even in a very
difficult environment", Bräunig comments with satisfaction. "KfW has
asserted itself excellently in the international capital markets. So
there is every reason to look forward to the second half of 2009 with
optimism".

As for the securitisation market, Bräunig considers a transaction
concluded with Postbank through KfW's securitisation platform PROVIDE
in June as a "positive signal". A portfolio of German housing loans
in a volume of roughly EUR 1.5 billion was securitised under the
deal.

Bräunig does not conceal the fact that massive undesirable
developments have occurred in some sub-segments of the international
securitisation market but advocates a differentiated view of this
market. After all, securitisations based on granular loan receivables
and which originate from the banks' existing portfolio have shown
themselves to be fundamentally robust even during the crisis. The
losses from such transactions average less than 1% in Europe and even
less than 0.1% in KfW's platform transactions, which indicates the
high quality on average of the securitised portfolios.

"Simply structured securitisations, which the banks use primarily
as a means to refinance their core business and reduce their capital
charge, will remain important in the future as well, particularly to
ensure the credit supply for SMEs", says the board member of
Germany's biggest promotional bank. "They are an economically useful
instrument, and for this reason we will continue to offer our
securitisation platforms and our expertise in order to support the
lending operations of banks for SMEs and for private housing
construction", emphasises Bräunig.

For more detailed information on KfW's capital market activities
click on the menu item "Press" in the English version of KfW's
website at www.kfw.de.

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

Contact:
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