KfW's capital market activities - continuity and innovative transactions set the tone in the first half of 2006

Frankfurt, Germany (ots) - In the first half of 2006 KfW raised
EUR 35 billion in the international capital markets. The total volume
of funding for 2006, which was estimated at EUR 50 to 55 billion in
December 2005, remains unchanged. These figures were announced by KfW
today at its semi-annual capital market press conference.

With an issue volume of EUR 14 billion, KfW's bonds denominated in
euro account for around 40% of the funds raised in the first six
months of the year. With the placement of a EUR 5 billion benchmark
bond, KfW entered new territory in January. This was KfW's first
issue of a bond with a 15-year maturity. A further euro benchmark
bond with a three-year maturity was also issued for EUR 5 billion.
Under its USD-programme, KfW issued bonds with all three benchmark
maturities - three, five and ten years - in the first half-year. In
addition, the first US dollar zero bond in global format was issued;
it had a volume of USD 3 billion and, owing to its 30-year maturity,
was subscribed to mainly by US investors. Overall, the equivalent of
EUR 11 billion was raised in US dollars, which corresponds to a share
of 32% in the funds raised to date.

The foreign currency share in the funding in the first half of
2006 totals 60%. KfW has issued bonds denominated in 22 different
currencies, including for the first time the Botswana pula, the
Egyptian pound and the new Romanian leu. These currencies constitute
an attractive addition to KfW's product range; investors mainly add
them to their portfolios with the aim of exploiting higher interest
rates in these currencies to boost the return on their entire
portfolio. By offering bonds in a wide range of different currencies
and structures, KfW is reaching a steadily growing number of
international investors. "This development will continue", announced
Hans W Reich, Chairman of the Board of Managing Directors of KfW
Bankengruppe. "The capital markets in Asia, for example, which still
sound fairly exotic to us, are growing markets and will assume
greater importance for KfW funding". A special highlight was, in May
2006, the first KfW issue in Malaysian ringgit. This was KfW's first
step towards establishing a regular presence on local Asian capital
markets.

KfW will raise the remaining EUR 15 to 20 billion in funding
needed for 2006 in the capital markets through the mix of instruments
from its three funding pillars - benchmark programmes, other public
bonds and private placements.

The privatisation of parts of Deutsche Post and Deutsche Telekom
on behalf of the German government has allowed KfW to make further
impressive appearances on the capital market in recent years. More
recently, in April 2006, KfW sold some 4.5% of Telekom shares to the
US financial investor Blackstone and thus contributed to creating a
different awareness of this investor group in Germany. "We have
structured the largest placings, have often been the "first mover" at
the right time in the market and have provided the right product for
the investor group concerned", is how Mr Reich described KfW's
approach to privatisation.

The standardisation of securitisation achieved through the PROMISE
and PROVIDE platforms has enabled KfW to use its promotional
instruments efficiently for other types of loans. In the first half
of 2006, for example, a portfolio of eastern European SME loans (Roof
CEE 2006-1) and a portfolio of loans to housing companies in eastern
Germany (primus MULTI HAUS 2006) were securitised through KfW for the
first time. With primus MULTI HAUS, a new class of assets was
created.

Since 2000, portfolios with a total volume of around EUR 90
billion had been securitised via the KfW platforms. PROMISE enabled
KfW to make a substantial contribution to creating a liquid secondary
market for SME loans and, as a consequence, to provide long-term
support for lending to this target group, which is so important to
the promotional institution.

In order to give SMEs better access to finance, KfW launched its
SME asset-backed securities portfolio at the end of 2005. Through
this programme - which has a volume of EUR 2 billion - KfW supported,
as an anchor investor, the complex innovative securitisation of SME
portfolios. It has so far invested roughly half a billion euro
through this programme.

"At KfW we are continuing to focus on enhancing the market for
securitising SME credit risk, the objective being to further mature
ABS products in this market segment", was how Mr Reich saw future
prospects. "In terms of providing loans for small SMEs, it will be
crucial in the medium term for loan products and securitisation to be
brought closely into line. Initial moves are being made in Germany."

Originaltext: KfW
digital press kits: http://presseportal.de/story.htx?firmaid=41193
press kits via RSS: feed://presseportal.de/rss/pm_41193.rss2

For further information: Nathalie Drücke,
Tel.: +49 (0)69 7431-2098, E-Mail: nathalie.druecke@kfw.de

KfW, Palmengartenstraße 5-9, 60325 Frankfurt
Abteilung Konzernkommunikation
Tel.: +49 (0)69 7431-4400, Fax: +49(0)69 7431-3266,
E-Mail: presse@kfw.de, Internet: www.kfw.de