10.07.2003 – 18:00
KfW's Capital Market Activities: Continuity and Innovation
Funding flagships prove their worth
Securitisation activities soon to have two "supporting legs"
Frankfurt/Main, Germany (ots)
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"The two flagships of KfW's funding activities - the Euro-Benchmark Programme and the USD-Programme - have proven their worth, not just in good weather but also in stormy times - in other words: also in a very volatile market environment," said Chairman of the KfW Board of Managing Directors Hans W. Reich at a press conference on Thursday in London. "KfW's securitisation platforms - PROMISE and PROVIDE - have become firmly established in the securitisation landscape in Germany. They are now complemented by the True Sale Initiative, for which thirteen credit institutions signed a Letter of Intent on July 9, 2003."
Funds raised in the 1st half-year 2003 amount to EUR 23.6 billion
In the first half of 2003, KfW raised long-term funds amounting to EUR 23.6 billion. Of these funds, 42% were in EUR, 41% in USD and 17% in other currencies.
The benchmark bonds continue to serve as the backbone of our funding activities.
In December 2002 we had announced that the minimum volumes to be issued in the year 2003 under the two benchmark programmes would be EUR 15 billion resp. USD 6 billion. Already in January 2003 the first USD global bond was issued under the USD-Programme in the form of a five-year, 3 billion dollar bond. It was followed shortly after in February by a five-year benchmark bond for EUR 5 billion. At the beginning of the second half-year in early July we successfully issued a ten-year Euro-benchmark bond with a volume of EUR 5 billion in very difficult market conditions. Thus, in total KfW has issued eight global bonds under the Euro-Benchmark Programme and four bonds under the USD-Programme since their introduction.
In addition, KfW's funding result is positively affected by a wide range of other bonds - both publicly and privately placed - with USD bonds in particular and also structured products gaining in popularity. One highlight in the first six months of 2003 was the three-year callable global bond with a volume of EUR 1 billion. Beyond that, in March a bond in Australian dollars was issued in Japan for a volume of approx. AUD 1.6 billion. It was sold to over 55,000 Japanese investors. All transactions were met with diversified demand and have a broad investor base.
KfW's private placements are also in strong demand: by the end of June, over 250 transactions were carried out, 190 of which in the Japanese market, which was particularly important.
Outlook: Funding requirements of up to EUR 50 billion in 2003 confirmed
KfW had previously announced that its funding requirements for the year 2003 would amount to up to EUR 50 billion. Including bonds issued in July, KfW raised approx EUR 35 billion on the capital markets including the exchangeable bond issued on July 8th. "This puts us slightly 'ahead of schedule.'", remarked Reich.
Under its Euro-Benchmark Programme KfW will issue bonds for a total volume of EUR 15 billion during the course of 2003. In the second half-year KfW plans to bring another EUR 5 billion benchmark bond onto the market, or to increase existing bonds.
One global bond is scheduled to come onto the market under the USD-Programme during the course of the second half-year.
Success story securitisation market: Synthetic securitisations of KfW expected to reach EUR 20 billion in 2003
"The synthetic securitisations carried out by KfW have since become an integral part of the securitisation landscape in Germany," said the KfW Chairman. In the first half-year 2003 five transactions with a volume totalling EUR 5.6 billion were concluded. However, for 2003 KfW is expecting the volume of synthetic securitisation transactions to reach around EUR 20 billion, although this will ultimately depend on the market situation and the ability of the originators to 'deliver.'
In the transaction "MILE.N1" that was initiated by NordLB and carried out on the PROMISE platform at the beginning of the year, KfW for the first time securitised a small credit portfolio of a savings bank. PROMISE COLOR is another transaction that was completed by KfW just a few days ago together with HypoVereinsbank.
Since the PROMISE programme started in late 2000, approximately 26,000 SME loans altogether with a volume of over EUR 15 billion have been securitised in 10 transactions. "We are convinced that this contribution is vital for improving the overall financing conditions for small and medium-sized enterprises (SMEs). In addition, it will directly help prevent the much-discussed 'credit crunch,'" said Reich.
The use of the PROVIDE platform for private housing loans also developed quite satisfactorily. In the first half-year a third transaction with BHW and another with Commerzbank as well as a securitisation transaction for WestImmo were concluded. This caused the total securitisation volume under PROVIDE to increase to over EUR 19 billion, with 340,000 private housing loans distributed over 13 separate transactions. Of this amount, EUR 4.31 billion were handled during the first half of 2003.
After the first European transaction with Bank Austria (PROMISE Austria) last December, the first large-volume PROVIDE transaction with another European bank outside of Germany is now in its final stages. In the future KfW will continue to conduct transactions with European banks whose portfolios conform to the KfW platforms. This offers the advantage that the investor base will become wider, also 'across the borders,' owing to the standardization of the transactions. Therefore, not only German but also other European banks can benefit from more liquidity. Ultimately, this will increase their ability to extend new loans.
"Looking back on the last two years, I don't think it would be too presumptuous to say our securitisation transactions have been a success story," emphasized Reich. "Although synthetic securitisations still influence the German market, the rapid build- up of True Sale is extremely important for the expansion of the entire securitisation market. If this succeeds - and I am certain that it will then the German market will have two 'supporting legs.'"
ots Original Text: KfW Internet: http://www.presseportal.de
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