KfW''s capital market activities stand for liquidity, flexibility and responsibility
(ots) -
- 2018: euro is the funding currency of the year
- 2019: reliable bond supply of around EUR 80 billion
- KfW intensifies commitment to Green Bond Standards
KfW had a very successful year with its capital market activities.
140 bonds with a volume of EUR 75.5 billion (2017: EUR 78.2 billion)
were issued as of 3 December 2018. These included some prominent
issues. Good timing and a quick response to investor interest were
the keys to this success.
The euro accounted for a record 61% of the total funding volume
(2017: 53%). KfW was thus the largest non-governmental issuer on the
euro market in 2018. The US dollar accounted for 27% (2017: 34%). The
promotional bank raised a large part of the funds under its
"benchmark programmes" (73%), more than ever before. The trend in
recent years towards investors preferring large-volume, liquid bonds
in core currencies continued in 2018. KfW took advantage of the
favourable funding conditions and strong investor demand in euros to
refinance its promotional business cost-effectively. The market was
supported by the Eurosystem''s Public Sector Purchase Programme
("PSPP") for bonds, while investor demand for euro-denominated bonds
was particularly high overall. KfW also placed significant benchmark
bonds in the strategically important US dollar market, which met with
very good demand from investors. With its US dollar issues, KfW
underscores the significance of this market access for its funding
strategy because in 2018 KfW only occasionally benefited from a
refinancing advantage of the US dollar market over the euro market.
Good timing is crucial for successful transactions: it is always
important to serve the interest of international investors in KfW
products in the most stable market environment possible.
Uncertainties about Brexit, the trade dispute between the USA and
China and the political situation in Italy have caused high
volatility in the markets. Nevertheless, KfW has proven on several
occasions that it is adept at choosing the right time for
transactions and can thus place large-volume, liquid bonds very
successfully. It will continue to meet these challenges in 2019.
Market conditions shaped by monetary policy influence
The Eurosystem generated strong demand with the PSPP, meaning KfW
bonds are sometimes difficult to acquire in the secondary market. By
increasing the volume of outstanding bonds in the past year, KfW
raised its outstanding volume and thus counteracted the liquidity
shortage. Five increases were made under the euro benchmark
programme. Although KfW benefited from the demand as a result of the
PSPP purchases to fund its promotional business, the number of
investors in KfW''s order books, at around 130, is so high on a
regular basis that it is not dependent on any single investor, even a
large one.
Outlook for 2019
The coming year will show more specifically how the phase-out of
the PSPP will affect the markets. "The activities of the Eurosystem
have had a significant impact on the market. A slight correction in
market prices began already in the second half of 2018 with the
announcement by the ECB that the programme would be phased out. We
therefore only expect to see a gradual adjustment in bond prices next
year, and in the medium term we expect it to normalise," explains Dr
Frank Czichowski, Treasurer of KfW Group. In addition, the markets in
2019 will continue to be dominated by political events, which could
affect KfW''s funding activities.
For 2019, KfW''s expects to raise around EUR 80 billion in
long-term funding in the capital markets. The funding requirement is
mainly determined by planned new lending business, maturities of KfW
bonds, and early repayments of loans.
Sustainability in the financial sector
Sustainability is a core value in KfW''s mission statement, which
is why KfW has been committed to sustainability on the financial
markets for many years. "The aim is to raise awareness about
sustainability and climate change across a broad range of market
participants. We also want to make clear that market instruments can
effectively support political goals and that capital must be made
available for the transformation to a more sustainable economy,"
comments Czichowski. Fortunately, the number of issuers and investors
is steadily growing and suitable infrastructure (e.g. specialised
rating agencies, indices) is developing at the same time.
Since entering the green bond market a few years ago, KfW has also
pursued the goal of acting as a catalyst to support this development
in the financial industry. It has established itself as the largest
German provider of bonds that are directly linked with positive
environmental and social impacts. With issues of EUR 1.6 billion in
2018, the outstanding volume rose to a total of EUR 14.5 billion. In
addition to the largest green bond issued to date in Swedish krona,
KfW offered an 8-year euro green bond in 2018. Thanks to the annual
issue of new KfW Green Bonds, investors can now choose green bonds
with different maturities. KfW will continue its issue activities in
this segment in 2019.
As part of the sustainable financial community, the green bond
market exceeded the USD 500 billion mark in November 2018, some
eleven years after its birth. The coming year will show how much
further growth potential there is for the market. Many of the major
issuers have already refinanced a significant portion of their green
financing through green bonds; new issues require growth in credit
programmes or new projects.
KfW expanding its commitment
KfW further intensified its involvement in national and
international initiatives to develop market standards and guidelines
this year. One particular focus is cooperation in the Technical
Expert Group set up by the European Commission as part of the EU''s
Action Plan on Sustainable Finance. It is actively involved in
developing a proposal for a European Green Bond Standard. This is
intended to contribute to the growth of the market segment while at
the same time safeguarding the integrity of the green bond market.
The aim is also to increase the impact of green bonds by aligning
them with an EU taxonomy (uniform classification system for
sustainability). Finally, the new European Green Bond Standard is
intended to contribute to the environmental goals of the EU.
New green bond issuers in the promotion portfolio For its
promotional business via the capital market, KfW was active with
investments in green bonds (EUR 365 million) and securitisations of
small and medium-sized enterprises (EUR 967 million) in 2018.
This year, the projects financed in the green bond portfolio
focused on energy efficiency, renewable energy and environmentally
friendly transport. The development in Germany is encouraging: the
total number of German green bond issuers has risen to eleven. KfW
participated in two transactions of German issuers, which were
launched on the market for the first time in 2018. New investments of
EUR 300 million are planned for the promotion portfolio in 2019.
In 2018 KfW successfully continued its cooperation with other
promotional institutions under the "ENSI" initiative as part of its
capital market-based SME financing and invested in a securitisation
transaction from Greece for the first time. This was the first car
leasing transaction of a Greek company. The investment of the
promotional banks KfW, EIB, EIF and EBRD contributed to the financing
of SMEs and market opening in Greece. In addition to investments in
established markets, investments in less-established markets will
continue to be made in 2019 to contribute to the sustainable
development of the European securitisation market. For the coming
year, KfW plans to invest a total of around EUR 1 billion in SME
securitisations.
Service: More detailed information may be retrieved in the
attached handout and here:
- http://ots.de/cWZhXw
- http://ots.de/sV2XTS
Pressekontakt:
KfW, Palmengartenstr. 5 - 9, 60325 Frankfurt
Kommunikation (KOM, Nathalie Cahn
Tel. +49 (0)69 7431 2098, Fax: +49 (0)69 7431 3266,
E-Mail: Nathalie.Cahn(at)kfw.de, Internet: www.kfw.de
Original-Content von: KfW, übermittelt durch news aktuell
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Datum: 11.12.2018 - 10:12 Uhr
Sprache: Deutsch
News-ID 1679158
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