KfW

Successful placement by KfW of exchangeable bonds due 2013, exchangeable into shares of Deutsche Telekom AG

Frankfurt (ots) - KfW, through a syndicate of banks led by Goldman Sachs International and Morgan Stanley Bank AG, has successfully placed EUR 3.0 billion in bonds (the "Exchangeable Bonds") exchangeable into ordinary shares of Deutsche Telekom AG (the "Exchange Shares").

The terms of the Exchangeable Bonds, which have a maturity of 5 years and 1 month, have been fixed at a 3.25 % coupon, an exchange premium of 27.5 % and an exchange price of EUR 14.9341 per Exchange Share. The bonds are exchangeable into Exchange Shares after the first coupon payment date after one year and one month. Underlying the Exchangeable Bonds are 200,882,544 ordinary shares of Deutsche Telekom AG, or approximately 4.61 % of the company's currently outstanding share capital. The Exchangeable Bonds are callable by KfW on or after the third coupon payment date, subject to a 130 % call threshold, and are redeemable at 100 % of par at maturity.

"In consultation with the Ministry of Finance KfW decided to take advantage of the currently favourable conditions for equity-linked instruments to bring an Exchangeable Bond to the market", commented Dr. Frank Czichowski, KfW's Treasurer. "Demand for high quality credit in combination with a very liquid underlying allowed us to print the biggest Exchangeable Bond brought to the market in 2008 so far."

KfW has agreed to a 180-day lock-up period for its remaining stake in Deutsche Telekom AG and has granted to two Joint Bookrunners and Joint Lead Managers, Goldman Sachs International and Morgan Stanley Bank AG, a greenshoe option for a further EUR 0.3 billion.

DISCLAIMER

THIS ANNOUNCEMENT IS NOT AN OFFER OF SECURITIES FOR SALE IN THE UNITED STATES. This announcement is not for distribution, directly or indirectly, in or into the United States or to any US person (as defined in Regulation S under the US Securities Act of 1933, as amended). Neither the Exchangeable Bonds nor the Exchange Shares have been or will be registered under the US Securities Act. The Exchangeable Bonds and Exchange Shares may not be offered or sold in the United States absent registration or an exemption from registration under the US Securities Act. The Exchangeable Bonds and Exchange Shares may therefore not be offered, sold or delivered within the United States.

In the United Kingdom, this announcement is being distributed only to, and is directed only at, qualified investors within the meaning of Art. 2(1)(e) of the Prospectus Directive ("Qualified Investors") (i) who have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "Order") and Qualified Investors falling within Article 49(2)(a) to (d) of the Order, and (ii) to whom it may otherwise lawfully be communicated (all such persons together being referred to as "relevant persons"). This document must not be acted on or relied on (i) in the United Kingdom, by persons who are not relevant persons, and (ii) in any member state of the European Economic Area other than the United Kingdom, by persons who are not Qualified Investors.

Goldman Sachs International and Morgan Stanley Bank AG are acting for KfW and no one else in connection with the issue of the Exchangeable Bonds and will not be responsible to any other person for providing the protections afforded to their respective clients, or for providing advice in relation to the proposed issue.

In relation to each Member State of the European Economic Area whose national law sets out the requirement for KfW as an Issuer to publish a prospectus prior to public offering of the Bonds (each a "Relevant Member State"), each Manager has represented and agreed, that it has not made and will not make an offer of the Bonds to the public in that Relevant Member State prior to the publication of a prospectus in accordance with the applicable national laws and regulations. Stabilisation: EC Regulation 2273/2003, German law / FSA

Features

Issuer: KfW

Rating: AAA (Fitch Ratings) / Aaa (Moody's) / AAA (Standard & Poor's) Amount: EUR 3,000,000,000 Maturity: 27. May 2008 - 27. June 2013 Coupon: 3.25 % p.a. Issue price: 100 % Exchange Premium: 27.5 % Exchange Price: EUR 14.9341

Issuer Call:

On or after the 3rd coupon payment date after 3 years and 1 month subject to a 130 % call threshold

Dividend Protection: Above 5 % dividend yield

Selling Restrictions: Institutional private placement, Reg S only, no Rule 144a No sale in the US or to investors in Canada, Australia or Japan Sales to institutional investors only in Austria, France, Germany, Greece, Italy, Netherlands, Portugal, Spain and UK as per market practice and applicable securities law

Listing: Frankfurt

WKN: A0E9DE ISIN: DE000A0E9DE7

Joint Lead Managers (2):

Goldman Sachs International Morgan Stanley Bank AG

Co-Lead Manager(1):

Lehman Brothers International (Europe)

Co-Manager (6):

BNP PARIBAS Citigroup Global Markets Limited Deutsche Bank Aktiengesellschaft Dresdner Bank Aktiengesellschaft JP Morgan Securities Ltd. Merrill Lynch International

For further information please contact:

Dr. Charis Pöthig
Tel.: +49 (69) 7431-4683
E-Mail: charis.poethig@kfw.de

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



Weitere Meldungen: KfW

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