KfW stands for continuity and security in volatile capital markets

Frankfurt (ots) - To fund its promotional business this year, KfW
has sold more than 360 bonds in 17 currencies in a total volume of
EUR 75.8 billion to institutional investors in Germany and around the
world. "This year it was the European sovereign debt crisis in
particular that shaped the mood of the international capital markets
for long stretches. The markets were characterised by high
volatility. Nevertheless, thanks to our first-class German credit
quality and reliable issuing strategy, we have held our own very
well", said Dr Günther Bräunig, Member of the Executive Board of KfW
Bankengruppe in charge of capital markets, in Frankfurt today on the
occasion of the annual press briefing on the promotional bank's
capital market activities.

KfW expects a long-term funding volume of around EUR 75 billion
for the year 2011 as well. It will continue implementing the funding
strategy that has proven successful also in times of crisis and will
again offer its investors highly liquid benchmark bonds in euros and
US dollars as well as public transactions and tailor-made private
placements in the most diverse currencies and maturities. "The
sovereign debt crisis is not over, and it will take some time for
confidence to return to the markets. We will defy the imponderables
in the international capital markets with the security we offer as a
Bund surrogate and with the continuity and transparency that
investors all over the world appreciate", said Bräunig.

KfW expects more intense competition on the supply side in 2011.
While some European states will be working to reduce the level of new
borrowing as part of their consolidation efforts, other new issuers
will enter the market, such as the European Financial Stability
Facility (EFSF) for instance. In this regard, Bräunig explained: "In
recent years, with the emergence of government-guaranteed bank bonds,
we have already shown that we are capable of holding our own very
well in this competition. Not only are we firmly established in the
international capital market and very experienced, we also offer
investors very high flexibility in the issue of securities in the
most diverse currencies and maturities".

KfW is also attractive for investors who are orientated towards
sustainability, so-called "Socially Responsible Investors". "We have
long since applied the yardstick of our sustainability-oriented
promotional mandate to our capital market activities, for example by
sustainably managing our own liquidity portfolio. Other investors are
also increasingly mindful of the issuers' sustainability performance
in their investment decisions. And leading sustainability rating
agencies have given our business activities excellent assessments",
explained Bräunig.

In its capital market press briefing KfW regularly reports on the
market segment of "asset securitisation" as well. The situation in
the European securitisation markets has brightened up this year.
Securitisation transactions totalling around EUR 86 billion were sold
to investors (EUR 19 billion in 2009), with the securitising banks
using the instrument primarily for funding purposes. Particularly
British and Dutch RMBS as well as German automobile ABS have been
positively received by the market. With the successful placement of a
securitisation of German corporate loans, a positive development has
started in this asset class as well.

Nevertheless, not enough investors have yet returned to this
market segment, which very likely reflects the continuing lack of
trust. In response, Bräunig pointed out the solid performance of
European and German asset securitisation transactions, citing that
even three years after the crisis broke out the cumulative loss rate
of European securitisations is on a very low level.

"The securitisation industry continues to be called upon to
restore confidence in its products. It has set an important milestone
this year under the TSI by introducing the 'German Securitisation
Standard', which KfW was instrumental in developing", Bräunig
emphasised. It is a quality label that underscores the solid
structures of securitisations "Made in Germany". It includes
fundamental quality features, for example:

- The securitisation must be from the banks' existing portfolio
only; that is, the securitised portfolio must not contain any
loans granted on an "originate to distribute" basis,

- re-securitisation is not permitted, and

- the banks must assume a reasonable risk retention of at least 5%
of the transaction.

Bräunig emphasised the great importance of a functioning
securitisation market for the credit supply to the economy,
particularly in the year ahead. "Reviving the securitisation market
is not an end in itself! Rather, the credit supply to the economy
will be facing big challenges in the year ahead with a view to
changes to the regulatory framework and the very high funding
requirements of European banks. Credit institutions will therefore
need to use the entire range of covered funding instruments,
including securitisation", he explained.

KfW will therefore participate in securitisation transactions as
an "anchor investor" next year as well. In 2010 it already supported
securitisation transactions as an anchor investor with approx. EUR 1
billion. It will also continue to offer its securitisation platforms
PROMISE and PROVIDE. "We want to fulfil our responsibility as a
promotional institution and use all our possibilities to secure a
stable supply of credit as the economy recovers. Our capital market
activities - funding and asset securitisation - are also making a
substantial contribution to this goal", Bräunig concluded.

Service

You will find the press documents at
http://www.presseportal.de/go2/Capital-market-activities_2010-2011

Further information on funding operations in 2010 and
sustainability ratings:
http://www.kfw.de/EN_Home/Investor_Relations/index.jsp

Further information on the German Securitisation Standard:
http://www.presseportal.de/go2/German_Securitisation_Standard

Originaltext: KfW
digital press kits: http://www.presseportal.de/pm/41193
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Pressekontakt:
Nathalie Drücke
KfW, Palmengartenstraße 5-9, 60325 Frankfurt
Kommunikation (KOM)
Tel. +49 (0)69 7431-4400, Fax: +49 (0)69 7431-3266,
E-Mail: nathalie.druecke@kfw.de, Internet: www.kfw.de