KfW's capital market activities characterised by responsibility and professionalism

• KfW benefits from "flight-to-quality"
• Funding volume for 2012 to remain constant at about EUR 80 billion
• ABS investments to support long-term financing for SMEs

In this year marked by great turmoil and high volatility, KfW has again managed its funding very successfully. Germany's largest promotional bank raises about 95% of its funding in the capital market. By the end of November KfW had raised approx. EUR 78.5 billion from the issue of about 310 bonds in 11 different currencies, which is in line with previously announced plans. The 12 benchmark bonds issued account for around 54% (approx. EUR 43 billion) of total borrowings and underline investors' preference for liquid products. Other public bonds and private placements account for around 41% and 5% each of total funds raised. The euro and the US dollar were again the most important funding currencies with a share of approx. 50% and 30% each, followed by the Australian dollar (7.4%), the British pound (6.1%), the Norwegian krone (2.8%) and the Japanese yen (2.1%). Detailed figures and charts on the funding in 2011 are available under www.kfw.de/capitalmarkets-pressconference(PDF, 226 KB, non-accessible).

The success of KfW's refinancing is based on both its special status and its successful issue strategy: KfW's unique status in the sovereign, supranational and agency sector ('SSA') results from the very good credit quality of the Federal Republic of Germany and the explicit, direct guarantee.
The established issue strategy plays a major role in KfW’s successful funding. "Our investors appreciate our '3-pillar strategy' because it was implemented with foresight and vision and because it is transparent and set for the long term. Liquid benchmark bonds in EUR and USD, bonds in many different currencies as well as private placements are the three pillars of our funding - with this variety of products we convince investors worldwide. With this strategy we are well prepared to overcome times of crisis, which we have again proven this year," says Dr Günther Bräunig, member of the Executive Board of KfW Bankengruppe in charge of capital markets on the occasion of the capital market press conference in Frankfurt.

KfW supports its broad range of products through responsible and professional action in the capital market: The choice of the right issue date, the focus on the specific bond maturity and size requested at a specific time as well as market-driven pricing ensure the solid placement of KfW bonds and a stable secondary market performance. "With our strategy we make a substantial contribution to the stability of KfW bonds" summarises Bräunig. "We can rightly say that each and every benchmark bond issued by KfW this year was a success. Our professional capital market activities ensure that we have permanent access to many markets and all maturity segments, in particular also long maturities."

KfW will also start off 2012 with this strategic approach. For the coming year, the promotional bank is again planning a funding volume of around EUR 80 billion. The bank will manage this funding requirement with a maximum of flexibility regarding currencies, maturities and volumes and through its unique product variety. The funding programme includes benchmark bonds in EUR and USD as well as a wide range of non-core currencies. "The sovereign debt crisis is not over yet and we will most probably have to deal with high volatility and market turbulences in 2012 as well. 'Flight-to-quality' will continue to be investors' leading topic. Investors can further rely on our funding strategy, and I am convinced that, given our excellent credit quality and the many different investment opportunities we are offering, we will be successful in 2012 as well," says Bräunig.

KfW will continue its commitment in the German securitisation market in 2012 too with a special focus on supporting the securitisation of SME loans. "With our commitment in the securitisation market we support long-term financing for trade and industry and the SME sector in Germany", explains Bräunig and underlines the mostly positive performance of German securitisations in the last few years: "The stable performance of German securitisations is primarily due to the quality of the underlying loan portfolios. This is in marked contrast to the securitisation of US subprime mortgages."

As regards banks' demand for medium and long-term refinancing, KfW expects secured refinancing to gain increasing importance in the next few years. “In 2012 too, we will not only act as an investor in the market but will continue to provide our securitisation platforms and participate in initiatives to further develop the quality of this market segment, thereby supporting the provision of long-term financing for the SME sector“, explains Bräunig.