12.12.2008 – 09:30
KfW has investors' confidence and is well positioned for 2009
- High funding volume of EUR 75 billion successfully raised in 2008 - Funding requirements of EUR 65 - 70 billion announced for 2009
"This was a very unusual year for KfW's capital market activities. On the one hand, our funding requirements were higher than ever before, yet on the other hand, the market was characterised by phases of extremely high volatility. Despite these very difficult market conditions, our strategy proved itself exceptionally well! We offer our international investors first-class German credit quality and a broad product spectrum coupled with high liquidity, and, for good measure, add our maxim for action: 'flexibility, transparency and reliability'" - this is how Dr Günther Bräunig, member of the Managing Board of KfW Bankengruppe, assesses the bank's funding in 2008.
In order to obtain the funding it needed to perform its official promotional mission in 2008, KfW raised around EUR 75 billion in the international capital markets by 30 November by issuing 360 individual transactions in 22 currencies. More than half of the volume was generated in EUR and USD via the benchmark programmes. KfW is the only issuer in its market segment that has offered all maturities - in particular a 10-year bond - in its Euro Benchmark Programme this year, and all four bonds issued under this programme had a volume of EUR 5 billion. A total of eight transactions with a volume of USD 28 billion altogether were carried out across the entire maturity curve under the USD programme. "Investors in the USD programme also documented their confidence in KfW and even subscribed two bonds with a 10-year maturity, which is unusually long for the situation in the market this year - the response was remarkable", underscored Bräunig.
As international investors have a need for foreign currency diversification, the pound sterling accounted for a greater share of KfW's funding especially in the first six months, and at year-end its share is still around 12% (approx. GBP 7 billion or EUR 9 billion). All other 19 currencies in which bonds were issued account for slightly more than 9% of the bank's funding, with the two main issue currencies in this group being the Australian dollar (2.3%) and the Japanese yen (approx. 2%).
For many market participants the drastic aggravation of the financial market crisis since autumn 2008 has rendered refinancing conditions more expensive, making it more difficult to refinance. "We nonetheless succeeded in raising some EUR 18 billion in long-term capital since mid-September - another clear vote of confidence that lets us look optimistically to the next funding year", explained Bräunig.
For 2009 KfW expects the level of its promotional business to remain high, also given the contribution it will make to the German Government's economic stimulus package of measures entitled "Job security through more growth" (Beschäftigungssicherung durch Wachstumsstärkung). KfW's funding target for 2009 is EUR 65 - 70 billion. "We will raise these funds in the international capital markets. At the same time our good liquidity management gives us flexibility and also independence: our strong liquidity situation is such that we do not need to use the capital market - which will already face a major challenge next year due to the foreseeable increase in offers of state-backed issues - any more than necessary", said the member of KfW's Managing Board responsible for Capital Markets.
To generate the announced volume, KfW will rely on its established funding strategy in the international capital markets, which is valued by investors all over the globe. "We will keep the three pillars - benchmarks, public bonds and private placements - that have again proven themselves in a difficult 2008. We do anticipate that the benchmarks will play an even bigger role since investor demand for standardised, large-volume and highly liquid bonds is due to rise - in the longer term segment as well", added Bräunig.
Accordingly, five EUR benchmarks can be expected in three maturities (three, five and ten years). Given sufficient market demand, KfW will respond flexibly by issuing more of such bonds, if necessary, or increasing outstanding benchmarks. The same holds for the USD - here, too, KfW aims to serve the market with at least five highly liquid bonds in the desired maturities.
KfW assumes that the situation in the international capital markets will be marked by volatility and, at times, turbulence well into 2009, and takes on this challenge: "The key to success lies in the greatest possible flexibility in terms of timing an issue just right and choosing a maturity as well as in the greatest possible transparency in communication with market participants. Beyond that, consistency and reliability in its financial market activities prompt investors to continue to consider KfW's bonds as a 'safe haven' - and rightfully so. These maxims will shape our capital market presence in 2009, too", announced Bräunig.
For further figures on KfW's funding activities 2008/2009 go to www.kfw.de, "Press" section.
Original content of: KfW, transmitted by news aktuell