Strong first half-year in KfW's funding activities

Frankfurt am Main (ots) -

- Liquid KfW benchmark bonds shape bank's long-term funding
- Persistently high demand from international investors in
volatile market environment
- KfW revises funding requirements for 2018 slightly upward
- KfW is active in European Commission's High-Level Expert Group
on Sustainable Finance

In the first six months of 2018, KfW already raised EUR 46.3
billion in the international capital markets to fund its promotional
business. The bank looks back on a successful first half-year.
"Markets were marked by volatility in the first half as a result of
political turmoil and the announced unwinding of the Eurosystem's
purchase programme. However, with its federal guarantee KfW continues
to be regarded as a safe haven. We have fulfilled the expectations of
our international investors by continuously placing liquid bonds
internationally on a solid basis", explains Dr Günther Bräunig, Chief
Executive Officer of KfW.

High share of benchmark and euro in the lead again in first
half-year

As expected, the trend in 2018 is pointing to a clear investor
preference for large-volume, liquid bonds in the core currencies EUR
and USD. In the first half of this year, KfW already issued eight
benchmark bonds in EUR and USD and increased two euro benchmark
bonds, and all main maturities have been issued. Benchmark bonds make
up a strong 74% of its overall funding volume. In the current
interest rate environment, international investors value liquid EUR
bonds with long maturities in particular. Demand for these bonds has
met with a broad supply of liquid KfW EUR bonds with maturities up to
the year 2037.

Around 89% of funding in the first half-year was in the core
currencies EUR and USD. As in the previous year the euro was KfW's
main funding currency, with a share of around 56%. Most noteworthy
was a euro benchmark bond issued in April with a seven-year maturity.
With a volume of EUR 12.3 billion, this bond recorded the largest
ever order book of a bond issue of this type. "The entire segment of
supranational, government-guaranteed and public issuers has benefited
enormously from the purchase programme in the past. Funding costs in
the EUR market have dropped to a historic low. However, we generally
welcome the winding-down of the purchase programme, which will
initiate a normalisation of the markets", the CEO observes.

The second strongest funding currency of the first half was the US
dollar, with a share of 33%. KfW achieved particular visibility in
January with the issuance of its first ten-year USD benchmark bond
after nearly three years. The time window for this issuance was an
excellent choice. As the interest rate curve flattened out
increasingly in the further course of the year, KfW then achieved
good funding results in the USD market, particularly in short
maturities.

KfW issued 84 bonds in twelve different currencies in the first
half of 2018. It thus exceeded the number of currencies issued in all
of 2017 (ten currencies) in just six months. In the sterling market
KfW placed its largest ever bond issue with a volume of GDP 1
billion. The development in Swedish kroner also deserves special
mention. KfW has so far issued four SEK bonds in the equivalent of
more than EUR 650 million. In addition to two private placements, KfW
issued two green bonds, including its largest ever SEK transaction in
a volume of SEK 5 billion. That made Swedish kroner KfW's fourth
strongest funding currency in the first half of 2018.

Outlook on the second half of 2018

KfW raises the target corridor of its funding needs for 2018 by
EUR 5 billion to EUR 75-80 billion. This is mainly the result of an
updated forecast of off-schedule repayments in lending business for
the whole year 2018.

"The unwinding of the bond purchase programme of the Eurosystem
along with political uncertainties and cyclical warning signs will
create higher volatility in the markets in the second half as well.
However, reinvestments in the Eurosystem will give the markets the
necessary stability. The purchase programme is valuable for KfW but
not crucial", explains Bräunig. In the second half of 2018 KfW will
remain present in all important markets with a funding strategy that
is appreciated by international investors, and it will respond to
demand with the usual flexibility. "Achieving the best possible
funding results remains our goal. This will benefit our promotional
business and, hence, our borrowers", says the CEO.

Responsible banking, also at European level

Responsible action, including in the capital market, and a
holistic sustainability approach are part of KfW's culture. KfW
provides valuable impetus with its pronounced commitment to the green
bond market. This impetus is ultimately a catalyst for the further
establishment of a holistic sustainability approach which comprises
environmental aspects as well as social and governance aspects.

Particularly in its capacity as an issuer and investor in the
green bond market, KfW welcomes the EU Action Plan for Financing
Sustainable Growth, which makes sustainability the focus of the
financial sector. The European Commission has adopted a package of
legal proposals to implement the action plan. It has also set up a
high-level expert group with representatives of civil society,
academia, the business and finance community which, among other
things, will submit proposals for an EU-wide classification system
for sustainable economic activities and a Green Bond Standard. As one
of the representatives of the financial sector, Dr Karl Ludwig
Brockmann, KfW's sustainability officer, has been selected in the
high-level expert group by the European Commission. "The EU
recognizes the key role of financial markets in the necessary
transition to a sustainable economy and society. We are pleased to be
able to contribute to the development of sustainable standards for a
future-oriented financial market as a member of the high-level expert
group", explains Dr Bräunig.

More detailed figures and information may be found here:

- www.kfw.de/investor-relations
- www.kfw.de/Nachhaltiges-Investment

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

Original-Content von: KfW, übermittelt durch news aktuell