Favourable Market Environment and Lower Funding Needs for KfW
OREANDA-NEWS. In the first half of 2013 KfW raised around EUR 37.1 billion in the international capital markets (EUR 50.4 billion in the same period of 2012). KfW faced a favourable market environment in which highly liquid bonds from safe issuers in particular were again in demand. “Compared with the previous year, however, we have noticeably reduced the pace of our funding because high off-schedule loan repayments have also provided a substantial inflow of liquidity. This will enable us to have an even funding across the whole year more consistent with promotional business”, explained Dr Gunther Braunig, the member of the Executive Board of KfW Bankengruppe in charge of capital markets.
The share of the KfW Benchmark Programmes in euros and US dollars remains almost unchanged against the prior year, at around 60% of total funding. Bonds in US dollars were issued in all standard benchmark maturities (3, 5 and 10 years), while bonds in euros were offered with maturities of 3 and 5 years, as well as 7 years - the maturity which has established itself as a benchmark maturity in the past years. More than half of all US dollar Benchmark Bonds were placed with central banks around the world. “Central banks primarily buy bonds of the highest credit quality and with very high liquidity for their portfolios. The confidence this investor group has put in KfW once again underscores our reputation as a safe, reliable and transparent issuer in the international capital markets”, said Braunig.
Overall, in the first half KfW issued securities in more than 100 individual transactions and 12 different currencies. In addition to the high-volume Benchmark Bonds, two bond issues in Canadian and Australian dollars with a volume of 1 billion dollars each were among this year's funding highlights. KfW's debut in Chinese renminbi on the Hong Kong financial market in 2012 paved the way for two further successful renminbi transactions by KfW this year.
Not only does KfW offer its investors a diversity of investment opportunities of the highest credit quality - KfW bonds are also a responsible investment. KfW has been acclaimed by renowned sustainability rating agencies as Germany's most sustainable issuer and also internationally occupies one of the top positions. The agencies' ratings confirm the effectiveness of KfW's sustainability strategy in the areas of environmental, social and corporate governance.
The review of KfW's funding requirements has resulted in a minor adjustment. For 2013 as a whole KfW now expects a total funding volume of around 65 to 70 billion euros (previously 70 to 75 billion euros). This is mainly due to high off-schedule repayments on the assets side which are also expected to continue in the months ahead.
The prospect of a reduction in bond purchases by the US Federal Reserve Bank currently results in slightly higher capital market interest rates. “The emerging upcoming end of the central banks' loose monetary policy is a first step towards normalisation in the markets but could lead to higher volatility in the months ahead”, explained Braunig. “We are confident that KfW bonds will meet with good demand in what may possibly be a substantially changing market environment, not least because of the regulatory framework, which favours bonds from issuers like KfW, as well as the investors' continuing high investment demand.”
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