Strong domestic demand for 5-year KfW benchmark bond

The Euro Benchmark II/2009 matures on 25 February 2014 and pays a coupon of 3.125% p.a. Its reoffer price is 99.754 (yield 3.179%), corresponding to a yield pick-up of 111.4 bp over the Bundesobligation which matures in October 2013. The lead managers for the transaction are Citi, Deutsche Bank and UBS Investment Bank. The bond has received the same top-notch triple-A rating from Fitch Ratings, Moody's and Standard & Poor's as all KfW bonds.

Over the past months domestic investors have in particular been supporting capital market transactions of their national state-guaranteed issuers. With today's issue KfW therefore opted for a new syndicate structure. German banks with very good access to domestic investors were given a prominent role and succeeded in placing more than EUR 900 million with mostly new KfW investors.

Overall, orders from Germany accounted for nearly EUR 2 billion of the order book. “Getting German banks more involved in the marketing has contributed significantly to the success of the transaction and has enabled us to issue a bond volume of EUR 5 billion. This is also an advantage for international investors who appreciate the high liquidity associated with it”, said Dr Günther Bräunig, member of the Managing Board of KfW, adding: “We have once again demonstrated that we respond flexibly to new market developments. The substantial oversubscription of the transaction reflects the fact that the issue price is in conformity with the market and it underscores the investors' confidence in KfW”.
It was not least because of the new syndicate structure that the order book filled very quickly after being opened on Tuesday morning.

The order book was closed early on Wednesday morning, with EUR 6.2 billion subscribed and about 380 individual orders received. The issue was reoffered at mid swaps +45 to +50; but owing to the strong demand the issue was closed at mid swaps +47.

The breakdown of the order book by sector is as follows:

Breakdown by investor type:

Banks: 42 %
Funds: 31%
Central Banks: 12 %
Insurance Companies: 9 %
Others: 6 %
Geographical breakdown:
Europe: 89 %
Germany 32 %
UK 12 %
Switzerland 9 %
France 8 %
Asia: 6 %
Americas: 2 %
Others: 3 %
KfW has announced refinancing needs of around EUR 75 billion for 2009. With this issue the funding volume raised in the capital market this year has so far reached EUR 21.7 billion. The Benchmark programmes account for the lion's share of the volume. Including today's issue, since the beginning of the year KfW has already raised EUR 8 billion in two transactions under its Euro Benchmark Programme as well as USD 7 billion in two transactions under its USD Programme.

This press release is not an offer of securities for sale in the United States. Securities may not be offered or sold in the United States absent registration or an exemption from registration. KfW has registered the securities that are the subject of this press release for sale in the United States. The offering of the securities in the United States will be made by means of a prospectus that may be obtained from KfW and will contain detailed information about KfW and its management, financial statements and information about the Federal Republic of Germany.

Term Sheet KfW Euro Benchmark II/2009

EUR 5 bn – 3.125 % – 2009/2014

ISIN: DE000A0XXM38

Issuer: KfW Guarantor: Federal Republic of Germany Rating: AAA (Fitch Ratings) / Aaa (Moody's) / AAA (Standard & Poor's)
Size: 5,000,000,000 EUR Maturity Date: 25 February 2009 – 25 February 2014
Coupon: 3.125 % p.a Re-offer-Price: 99.754 Yield: 3.179 % p.a.
Format: Global Listing: Frankfurt
Lead Managers (3):
Citi
Deutsche Bank
UBS
Senior Co-Lead Managers (5):
DekaBank
Dresdner Kleinwort
DZ Bank
Landesbank Baden-Württemberg
Unicredit (HVB)
Co-Lead Managers (8):
Banca Akros Gruppo
BPM Barclays
BNP
Danske Bank A/S
HSBC
Morgan Stanley
Nomura
Royal Bank of Scotland
Selling Group (8):
Calyon Fortis
ING
Natixis
Nordea Bank
Danmark A/S
Santander
SEB
Société Générale Corporate & Investment Banking