KfW's funding strategy passes 2009 stress test successfully

Frankfurt (ots) -

- KfW concludes 2009 funding operations at EUR 74 billion

- Issues in all benchmark maturities - especially ten-year EUR and
USD benchmark bonds

- Funding volume of EUR 70-75 billion planned for 2010 -
successful issue strategy will continue

- Securitisation industry must implement new quality standards

To fulfil its promotional mandate, KfW Bankengruppe raised nearly
EUR 74 billion in the international capital markets in 2009, just as
it had announced. The overall environment this year, however, was
extraordinarily challenging for big issuers because the capital
markets were characterised by high volatility and by very rapid
changes in political, economic and monetary policy conditions. "So I
am all the more pleased that KfW has successfully passed the stress
test 'Funding in the Financial Market Crisis' as a reliable,
transparent and sustainable issuer", commented Dr Günther Bräunig,
member of the Managing Board of KfW Bankengruppe, on the occasion of
today's Capital Market Press Conference in Frankfurt. "Our funding
strategy has proven itself very well and enabled us to respond
flexibly to a changing capital market environment. KfW's first-class
credit standing has also contributed to this excellent result".

KfW is the only issuer of its category to have successfully
implemented its offer of liquid benchmark bonds both in EUR and in
USD across all benchmark maturities in 2009 - including the 10-year
maturity. It has raised EUR 19 billion and USD 21 billion through its
Benchmark Programmes, which represent around 47% of the funding
volume. "Particularly the subscription of long-term KfW bonds attests
to the fundamental trust which investors place in our institution,
which they perceive as a 'safe haven'. Well chosen timing and
professional execution of the issues are further contributing
factors", added Bräunig.

Bräunig also expressed satisfaction over the fact that KfW was
able to win numerous new investors in the crisis year, thus enabling
it to further diversify its investor base. On the one hand KfW was
able to benefit from German investors' heavier focus on domestic
issuers. On the other hand it succeeded in significantly expanding
its investor base in the USA. The share of German subscribers to EUR
benchmark bonds more than doubled to 34% (2008: around 15%), while
the share of US investors in USD global bonds increased to just under
47% (2008: some 27%).

For a global issuer it is extremely important to be firmly
anchored in the domestic market and to have a broadly diversified
investor base. Having a broad range of currencies and products on
offer is crucial. So far this year KfW has placed altogether 412
transactions in 19 different currencies in the market. The most
important currencies were the EUR (44%) and the USD (35%), followed
by GBP (7%), JPY (4%) and AUD (4%). Overall, some 20% of all issues
were in currencies other than EUR and USD. "The financial market
crisis has shown that currency and product diversity are the make or
break for KfW's funding strategy because it is the only way to
flexibly respond to investor needs. This is of strategic importance -
not only with a view to funding costs but also to securing our access
to liquidity", explained Bräunig.

KfW will continue to adhere to its successful funding strategy in
2010. Investors can expect more large-volume, liquid KfW benchmark
bonds in the core currencies EUR and USD in all maturities, and KfW
will respond to market conditions flexibly. Other public bonds in EUR
and other currencies as well as private placements will round off the
funding mix and give KfW a broad presence as an issuer in the capital
markets.

With a view to the funding volume for 2010, KfW expects funding
requirements of EUR 70-75 billion.

As a result of fiscal policy and the difficult economic situation,
Bräunig expects a high volume of European government bonds to be
offered next year. Moreover, the financial market crisis is likely to
give rise to further burdens for the real economy and bank debt
write-offs, which could delay the further stabilisation of the
capital market. On the other hand, however, the state guarantee
programmes that were launched across the globe to help banks
refinance have largely come to a close. "Uncertainty and volatility
will continue to accompany us in our capital market activities in
2010, and even issuers of the highest credit quality like KfW are not
immune to difficult market conditions. Yet particularly in the crisis
year, there was strong demand for liquid, high-quality investments
such as the ones we offer. This is why we are confident about 2010",
he concluded.

The securitisation markets continue to be in a very difficult
situation at the end of this year. Although some transactions took
place in the course of the year, a functioning, liquid market is
still very far away.

Bräunig emphasised that first and foremost it will be necessary
for investors to regain trust in this product before it can be
utilised again. He is convinced that new quality standards need to be
introduced in order to accomplish this. KfW is working on this
jointly with other banks and the True Sale Initiative. "High-quality
securitisations can play a vital role in securing the supply of
credit for enterprises. This, in turn, is crucial for the economy to
rebound and for avoiding a credit crunch, which would affect small
and medium-sized enterprises most of all", concluded Bräunig.

For detailed information on KfW's capital market activities click
on the menu item "Press" in the English version of KfW's website
www.kfw.de.

Originaltext: KfW
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Pressekontakt:
KfW, Palmengartenstraße 5-9, 60325 Frankfurt
Kommunikation (KOM)
Tel. 069 7431-4400, Fax: 069 7431-3266,
E-Mail: presse@kfw.de, Internet: www.kfw.de