Investors scramble for KfW's new three-year bond

The new Euro Benchmark III/2009 matures on 21 May 2012 and pays a coupon of 2.25% p.a. The re-offer price was set at 99.991%, yielding 2.253% and equating to a spread of 51.3 basis points over the Bundesobligation #150, due April 2012. The transaction was lead managed by Calyon, Commerzbank and The Royal Bank of Scotland. The bond has been assigned the same top-notch ratings from Fitch Ratings, Moody's and Standard & Poor's (AAA / Aaa / AAA) as all KfW bonds.

Market conditions for the highest class issuers have improved significantly over recent weeks and both credit spreads and new issue premiums for benchmark bonds have reduced substantially. KfW has responded to this trend swiftly and opened the books for this new three-year benchmark bond on Tuesday morning. The initial price talk in the marketing phase of “20 basis points area” over the swap curve was adjusted to 15 basis points within a matter of hours as a response to the overwhelming demand for the issue.

“Demand for first-class credit quality continues unabated, and, driven by this powerful momentum, the order book was quickly oversubscribed. The habitually strong international demand for KfW bonds and the additional impetus from German investors have enabled us to launch another EUR 5 billion bond issue. Investors continue to reward KfW for the liquidity and transparency that our bonds offer them, and with this deal we have benefited from very favourable market conditions,” commented Dr Günther Bräunig, member of the Management Board of KfW Bankengruppe.

The geographical breakdown of the order book is as follows:

Geographical breakdown:

Europe: 83%
– Germany: 38%
– France: 12%
– UK: 11%
– Switzerland: 8%
Asia: 7%
Americas: 7%
Other: 3%
Breakdown by investor type:
Banks: 62%
Funds: 16%
Central banks: 12%
Insurance companies: 3%
Other: 7%
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 40.3 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 16 billion under its Euro Benchmark Programme as well as USD 14 billion in four 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 III/2009 – 2,250% Maturity 21 May 2012 –

ISIN: DE000A0XXM87
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: 20 May 2009 – 21 May 2012
Coupon: 2.250% p.a
Reoffer price: 99.991
Yield: 2.253% p.a.
Format: Global
Listing: Frankfurt
Lead Manager (3):
Calyon
Commerzbank
Royal Bank of Scotland
Senior Co-Lead Manager (4):
Deutsche Bank
DZ Bank
Landesbank Baden-Württemberg
Unicredit (HVB)
Co-Lead Manager (8):
Banca Akros Gruppo BPM
Barclays
Danske Bank A/S
Goldman Sachs
HSBC
JP Morgan
Nomura
UBS
Selling Group (8):
Deka
Fortis
ING
Natixis
Nordea Bank Danmark A/S
Santander
SEB
Société Générale Corporate & Investment Banking