KfW stands for liquidity, flexibility and responsibility in the capital markets

Frankfurt am Main (ots) -

- Funding of EUR 70-75 billion planned for 2016
- "Green Bonds - Made by KfW" - sustainability rating of banks to
be taken into account for the award of mandates
- European cooperation in the securitisation of SME loans

In the upcoming year, KfW plans to raise long-term funding in an
amount of EUR 70-75 billion in international capital markets. The
promotional bank expects sustained economic growth and momentum in
Germany and Europe in 2016. "We are optimistic and expect the
positive trend to be reflected in the promotional business. We will
apply all of our proven strengths again in 2016 to raise funds for
our promotional mandate at the best possible terms," explains Dr
Günther Bräunig, Member of the Executive Board of KfW in charge of
capital markets, at the annual press briefing on KfW's capital market
activities in Frankfurt.

Based on the issue of around 170 bonds, KfW has raised so far
roughly EUR 62 billion in international capital markets this year to
fund its promotional business. The highly unusual market developments
that characterised 2015 required an extremely flexible issuance
strategy. 2015 is the first year that KfW's funding has been
concluded with a higher share of USD (around EUR 28 billion
equivalent, 45% of total funding) than of EUR (around EUR 23 billion,
38%). In addition, KfW issued securities in twelve currencies with a
total value of around EUR 11 billion (17%) - this included a
first-time issue in the Kauri bond market in New Zealand.

"The capital markets were affected by U.S. and European central
bank policies, investor uncertainty, distorted secondary markets and
an increase in regulation. The market environment changed
continuously in the course of the year, especially in the core
currencies EUR and USD, which required a very high degree of
flexibility on our part," Bräunig adds. Since the ECB announced its
expanded asset purchase programme in January 2015, yields of German
government bonds and also of KfW bonds have dropped to record lows.
Investors, therefore, turned increasingly to other markets as the
year progressed. The USD became KfW's most important funding currency
already in the first quarter and KfW issued four USD global bonds
with a total value of USD 15 billion in the first six months of the
year alone.

However, KfW was able to issue liquid bonds as well in the
EUR-market, which was characterised by record-low yields, by taking
up investors' interest just at the right time as demonstrated for
instance with its 15-year bond in April. A KfW benchmark bond which
for the first time yielded negatively was issued in October.

"The market environment was far from easy in 2015, but we have
fared very well and continuously offered investors liquid bonds in
times characterised by a lack of liquidity. 2016 will also be
challenging. We will make good use of our access to all market
segments and professionally adapt to the market environment," says
Bräunig. At the end of the day, bonds can only be placed successfully
in the market if all of the relevant parameters - price, volume,
maturity and issue date - are weighed up very carefully for each
individually planned issue.

Climate protection asks for green bond market

KfW issued Green Bonds worth around EUR 3.7 billion in 2015,
including liquid Green Bonds denominated in Australian Dollars and
British Pounds, as announced. KfW will continue to support the market
segment with "Green Bonds - Made by KfW" in 2016. Depending on the
market, these can also be denominated in additional currencies and
with different maturities. Furthermore, KfW will provide a new
stimulus: "We will be the first issuer to include the sustainability
rating when selecting banks as lead managers of our Green Bonds. This
way, we want to promote aspects of sustainability in business models
of market participants," explains Bräunig.

KfW was the first market participant to enter the green bond
segment not only as an issuer but also as an investor. The
promotional bank has already invested around EUR 280 million in its
green bond portfolio launched in April 2015, the focus being on green
bonds financing renewable energies, resource efficiency and
environmentally friendly transportation concepts. The portfolio is to
grow to EUR 1 billion in 3 to 4 years.

KfW plans green bond investments of around EUR 300 million in 2016
and hopes for a growing, diversified offer by issuers. In particular,
KfW would welcome a larger engagement of German market participants
in the green bond market.

"Green bonds have become an integral part of our dialogue with
investors and other market participants," says Bräunig. "We make our
specific expertise as issuer and investor available to international
working groups and thus contribute further to the qualitative
development of this market segment, which can and must assume an
important role in climate protection financing."

Revival of the European securitisation market

KfW has been active as an investor in the securitisation market
for many years. It invested around EUR 840 million in securitisation
transactions in 2015 to promote and diversify SME financing via the
capital market; out of this amount around EUR 190 million was
invested in European SME securitisation transactions. KfW plans a
commitment volume of EUR 1 billion for 2016, half of which is to be
spent on SME financing in Germany and Europe respectively.

The "Investment Plan for Europe" ("Juncker Plan") is also intended
to strengthen the cooperation of national funding institutions and
the EIB Group. EIF and KfW chair a working group on "SME
securitisation in Europe". One of the working group's objectives is
to define standardised processes and minimum criteria for the
participation of promotional institutions in securitisation
transactions. In order to complement SME financing by this capital
market instrument in Europe, where possible, funds from the European
Fund for Strategic Investments (EFSI) should be involved.

Securitisation as a capital market instrument is now widely
recognised by politicians, regulatory authorities and central banks
as a useful instrument to finance the real economy. Moreover, the
realisation is gaining ground that an overly tight regulatory
framework would prevent a recovery of this market. "This paradigm
shift makes me optimistic that securitisation as the link between
credit and capital market will become an importantbuilding block of
the Capital Market Union. I hope very much that the regulatory
initiative for STS (simple, transparent, standardised) securitisation
will come to a successful conclusion and that STS securitisation will
largely be handled in a comparable way to similar instruments in the
future," Bräunig explains. KfW will do its utmost to support this
market segment as it considers it important for SME financing and
therefore for growth in Europe.

Service:

- Facts and figures on KfW's funding:
https://www.kfw.de/KfW-Konzern/Investor-Relations/index.html

- Information on KfW's Green Bond Portfolio:
http://ots.de/gM1U7

- Information on the Green Bonds "Harmonized Framework for Impact
Reporting": http://ots.de/zdedq.

Pressekontakt:
KfW, Palmengartenstr. 5 - 9, 60325 Frankfurt
Kommunikation (KOM), Nathalie Cahn,
Tel. +49 (0)69 7431 2098, Fax: +49 (0)69 7431 3266,
E-Mail: Nathalie Cahn@kfw.de, Internet: www.kfw.de