12.07.2006 – 13:00
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."
For further information: Nathalie Drücke, Tel.: +49 (0)69 7431-2098, E-Mail: firstname.lastname@example.org
Original content of: KfW, transmitted by news aktuell