KfW successfully completes funding for this year

Frankfurt am Main (ots) -

- 2019: targeted volume of EUR 80 billion reached
- Inaugural EURSTR-Bond successfully issued
- Innovations in 'Green Bonds - Made by KfW' very well received
- 2020: planned long-term funding amounts to EUR 75 billion

"We have succeeded once again in meeting our high funding requirements in
challenging market conditions this year", explained Dr Frank Czichowski,
treasurer of KfW Group, at the promotional bank's capital market press briefing
in Frankfurt today. Issuers and investors have clearly felt the impacts of
central bank policies this year. Bond yields dropped to record lows in the
course of the year, especially in the euro market. Whereas only the yields of
KfW bonds with shorter maturities were in negative terrain at the start of the
year and investors were still able to divert to longer maturities, the yield
curve of all KfW bonds was in the negative zone at times during the second half
of the year. "It is particularly in this kind of market conditions that our
established and well-diversified position in the international capital markets
shows its worth", Czichowski elaborated. "Although the euro remains KfW's most
important funding currency with a share of more than 50%, we have been able to
respond flexibly to specific investor demand in foreign currency bonds".

As at 30 November 2019, the promotional bank issued 148 bonds in 12 currencies
in the equivalent of EUR 79.4 billion in the international capital markets to
finance its business. This makes KfW by far the world's largest non-sovereign
bond issuer.

Refinancing operations in its two core currencies, euro and US dollar, accounted
for EUR 41.6 billion and USD 23 billion (approx. EUR 20.7 billion). As was
foreseeable already in the first half of the year, there was unusually high
demand for bonds in pounds sterling, which KfW responded to by issuing 18 GBP
bonds in a total volume of GBP 8.45 billion (approx. EUR 9.6 billion). With a
market share of 19%, KfW is the largest GBP issuer in the SSA segment this year.
A similar trend emerged in the Norwegian kroner, which offers attractive returns
for investors. KfW responded to this with a significantly higher offer, placing
bonds in a total volume of NOK 24.5 billion (approx. EUR 2.5 billion). That made
KfW the largest issuer in this currency in 2019 after the Norwegian state.

Liquidity remains highly valued

KfW's attractiveness for investors is strongly related to the liquidity of its
bonds. "The strategy we had announced for 2019, which was to further expand our
offer of highly liquid bonds in a variety of currencies, has proven to be the
right one", explained Czichowski. This is demonstrated by the regularly
oversubscribed order books, the successful placement of bonds in the primary
market and their performance in the secondary market. Investors value
large-volume bonds because they can trade them in the secondary market at any
time.

Development of new reference interest rates EURSTR - SONIA - SOFR

KfW made an important contribution to the development of the market and
liquidity with its first EURSTR bond, which was placed in November with a volume
of EUR 1 billion. The new Euro Short Term Rate (EURSTR) will gradually replace
the EONIA overnight interest rate, so that a growing number of investors who can
subscribe to EURSTR bonds is to be expected. "Bonds with variable interest rates
represent merely a supplement to our set of funding instruments, but we will
keep our eye on this segment. Provided the market conditions are favourable, we
will also issue bonds to support the establishment of the new reference interest
rates SONIA (UK) and SOFR (USA)", explained the treasurer.

Innovations in 'Green Bonds - Made by KfW' very well received

The green bond market continued to grow strongly in 2019. With new issues
amounting to some EUR 170 billion around the world, the outstanding volume has
now risen to approx. EUR 500 billion. KfW, too, was able to significantly expand
its offer through the announcement of the expansion of its Green Bond programme
in May 2019: This year it issued 11 bonds in seven different currencies with a
total volume equivalent to EUR 8.1 billion. Among all green bonds a EUR 3
billion outing stood out and was recently increased to EUR 4 billion.

KfW welcomes the steadily growing demand from investors around the world. After
all, since it entered the market segment it has been aiming to win global
investors for climate action related financing. "It is our hallmark that we, as
a German issuer with the highest possible rating, not only provide liquid Green
Bonds but also a wide variety of products and currencies", explained Czichowski.
In addition to that, KfW has received very positive market feedback after
explicitly advertising its sustainability ratings when marketing its Green
Bonds. "We are convinced that a holistic view of the issuers' business model
will gain importance particularly in this segment", added Czichowski.

The positive development of the market segment is also being reflected in KfW's
Green Bond portfolio. In 2019 the investment target of EUR 300 million was
reached, resulting in a total portfolio volume of EUR 1.6 billion. New issuers
account for more than half of new investments, of which Europe is the dominant
geography. These Green bonds are used primarily to finance projects in the areas
of energy efficiency, environmentally sustainable transport and renewable
energy.

Outlook

KfW plans to raise EUR 75 billion in the capital markets in 2020. Up to EUR 8
billion of this volume is to be raised through the issuance of Green Bonds - in
euros and in non-euro currencies. KfW expects the euro market to continue to be
supported by an expansionary monetary policy in the coming year as well, that
the interest level in the euro area will remain largely steady next year and
further negative yields can be expected. This will require sound judgement in
terms of timing and pricing new KfW issues. "We have strong credit and
sustainability ratings, a proven and transparent funding strategy, and a broad
range of products and currencies", said Czichowski, confident that the target
volume will be comfortably achieved.

The green bond segment will continue to grow dynamically. Besides further
diversification of sectors in which issue proceeds are used, issues by
sovereigns can further support the market as well.

Service:

- Detailed figures on KfW's funding in 2019 by currencies and
products and on KfW's Green Bond portfolio are contained in the
handout accompanying the press briefing: http://ots.de/jfpC5k.
- Information on the expansion of KfW's Green Bond programme can
be found here: http://ots.de/ro4mcB
- KfW plans to publish the allocation report on the Green Bonds
issued in 2019 in the first quarter of 2020.

The Green Bond impact report on the years 2017-2018 is scheduled to be published
in the first half of 2020 when all data and analyses from the external evaluator
are available.

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

Additional content: https://www.presseportal.de/pm/41193/4466094
OTS: KfW

Original-Content von: KfW, übermittelt durch news aktuell