In the first half of 2008 KfW successfully defied the very volatile international capital markets with its funding strategy. This was stated by Dr. Frank Czichowski, treasurer of KfW Bankengruppe, at today's press conference in London on the German credit institution's capital market activities.
KfW funds its promotional lending business by issuing debt instruments, and at the end of 2007 it had expected funding needs of around EUR 70 billion for this year. Despite good news from the German economy, the market environment has been considerably more difficult than in the past as a result of the financial market crisis with all the related turbulence and pronounced volatility. "A flexible and transparent funding strategy has always been KfW's trademark; beyond this the key to success this year lies in diligent timing for debt issues as well as in choosing the proper maturity, and in what has been confirmed by market observers to be a wary and fair pricing of KfW securities", explained Czichowski.
In the first six months of this year KfW has already raised EUR 46.9 billion in over 200 individual transactions in 22 different currencies; this is the liveliest funding activity ever in a comparable period of time. The main currencies were the euro (16.9 billion, 36%) the US dollar (equivalent of EUR 16.7 billion, 36%) and the pound sterling (equivalent of more than EUR 8.3 billion, 18%), which has firmly established itself as the third core currency.
Eight benchmark bonds were issued in the first half alone. In the euro segment a 3-year and a 10-year benchmark were issued in a volume of EUR 5 billion each. In the USD segment KfW issued global bonds of 3-, 5- and 10-years twice, with volumes of no less than USD 3 billion each. Thus, more than 50% of the funding in the first six months is made up of large-volume and highly liquid benchmark bonds in euros and US dollars in the equivalent of around EUR 23.8 billion. "Our benchmark programmes have proven their value as the most important pillar of our funding strategy. In the difficult current market environment international investors appreciate KfW's first-class credit quality, and they can rely on the performance of our bonds", declared Czichowski.
Furthermore, the five-year bond exchangeable into ordinary stock of Deutsche Telekom AG which was issued in May received great attention, successfully continuing the federal government's and KfW's privatisation of the enterprise. This issue aroused great interest among institutional investors and also impressed many market players with its volume of EUR 3.3 billion.
Premature repayment of USD bonds and follow-up financing increases funding volume slightly to around EUR 75 billion
The mid-year review of annual funding needs performed regularly by KfW has led to a slight increase in the funding volume from around EUR 70 billion to now EUR 75 billion. "As the interest level has declined, particularly in the USA, this year there will be increasingly more premature repayments of callable US dollar bonds. We plan to make follow-up funding transactions for these bonds. This will slightly increase our funding needs by a total of around EUR 5 billion", explained KfW's treasurer.
Looking back on the successful first half of the year Czichowski expressed optimism that KfW will well manage the funding of the remaining approximately EUR 28 billion. The focus of KfW's international capital market activities will continue to be the euro and the US dollar; the pound sterling, the Japanese yen and numerous niche currencies in which KfW offers investors debt instruments will also play their important part in the funding.
A strategically important novelty was introduced by KfW in the first quarter of this year by adopting sustainability criteria in the management of its own financial investments. The bank had committed itself to apply these criteria by signing the UN Initiative "Principles for Responsible Investment" (UN-PRI). KfW now bases its investment decisions for its own liquidity portfolio not only on the still important credit quality criterion but also on a sustainability rating and gives preference to issuers that meet the sustainability criteria established by KfW. In preparing this rating KfW cooperates with the sustainability rating agency "Scoris GmbH".
"Sustainability as a central theme that guides the promotional activities and KfW Bankengruppe itself has thus also found its way into our capital market activities. We also hope that this step will further enhance the acceptance and implementation of the UN-PRI within the investment industry", said Czichowski.
For more information on KfW's funding and sustainable financial investment management please go to http://www.kfw.de/EN_Home/Presse/Press_Conferences/index.jsp and http://www.presseportal.de/go2/Socially_responsible_investment
Mathematical confirmation: Rewiring financial networks reduces systemic risk
22.06.2017 | International Institute for Applied Systems Analysis (IIASA)
Frugal Innovations: when less is more
19.04.2017 | Fraunhofer-Institut für Arbeitswirtschaft und Organisation IAO
An international team of scientists has proposed a new multi-disciplinary approach in which an array of new technologies will allow us to map biodiversity and the risks that wildlife is facing at the scale of whole landscapes. The findings are published in Nature Ecology and Evolution. This international research is led by the Kunming Institute of Zoology from China, University of East Anglia, University of Leicester and the Leibniz Institute for Zoo and Wildlife Research.
Using a combination of satellite and ground data, the team proposes that it is now possible to map biodiversity with an accuracy that has not been previously...
Heatwaves in the Arctic, longer periods of vegetation in Europe, severe floods in West Africa – starting in 2021, scientists want to explore the emissions of the greenhouse gas methane with the German-French satellite MERLIN. This is made possible by a new robust laser system of the Fraunhofer Institute for Laser Technology ILT in Aachen, which achieves unprecedented measurement accuracy.
Methane is primarily the result of the decomposition of organic matter. The gas has a 25 times greater warming potential than carbon dioxide, but is not as...
Hydrogen is regarded as the energy source of the future: It is produced with solar power and can be used to generate heat and electricity in fuel cells. Empa researchers have now succeeded in decoding the movement of hydrogen ions in crystals – a key step towards more efficient energy conversion in the hydrogen industry of tomorrow.
As charge carriers, electrons and ions play the leading role in electrochemical energy storage devices and converters such as batteries and fuel cells. Proton...
Scientists from the Excellence Cluster Universe at the Ludwig-Maximilians-Universität Munich have establised "Cosmowebportal", a unique data centre for cosmological simulations located at the Leibniz Supercomputing Centre (LRZ) of the Bavarian Academy of Sciences. The complete results of a series of large hydrodynamical cosmological simulations are available, with data volumes typically exceeding several hundred terabytes. Scientists worldwide can interactively explore these complex simulations via a web interface and directly access the results.
With current telescopes, scientists can observe our Universe’s galaxies and galaxy clusters and their distribution along an invisible cosmic web. From the...
Temperature measurements possible even on the smallest scale / Molecular ruby for use in material sciences, biology, and medicine
Chemists at Johannes Gutenberg University Mainz (JGU) in cooperation with researchers of the German Federal Institute for Materials Research and Testing (BAM)...
19.06.2017 | Event News
13.06.2017 | Event News
13.06.2017 | Event News
27.06.2017 | Power and Electrical Engineering
27.06.2017 | Information Technology
27.06.2017 | Physics and Astronomy