Press Release from 2022-07-11 / Group, Investor Relations

KfW with above-average funding in first half of the year – targeted funding volume for 2022 increased to EUR 90 bn

  • More than EUR 62 bn already raised on international capital markets
  • Thereof EUR 7.8 bn via green bonds issued
  • Stabilizing measures for companies affected by the war

In a difficult and volatile environment, KfW successfully conducted its refinancing via the capital markets in the first half of 2022. At the beginning of July, the funding volume amounted to an equivalent of more than EUR 62bn (as of 30 June 2022: EUR 56.6bn). Thus, KfW has already reached around 73% of the funding volume originally planned at the beginning of the year, which is a higher level compared to same time periods in previous years.

“We are facing extraordinary times. This is also reflected at the capital markets, where we have to deal with high volatility, increasing inflation and a turning interest environment. The above-average funding activity in the first half of 2022 was a strategic decision to position ourselves well for the challenges ahead. We have seen strong investor demand in recent months, not least of all due to the good credit rating and liquidity of our bonds, which we always keep as our focus”, states Tim Armbruster, Treasurer of KfW.

Due to the comprehensive product portfolio, the broad diversification across currencies and the high liquidity of KfW bonds, demand from investors remained high in the first half of the year despite the volatile market environment. As of 30June 2022, the euro remains the most important currency with a share of 58% of total funding volume. The US dollar share was at 24% while the British pound accounted for 10% of KfW’s funding mix.

15 benchmark transactions (including taps) in euro and US dollar of the equivalent of almost EUR 36.6bn represented 64.6% of the funding volume as of June 30, 2022. This includes all important maturities (3, 5, 10 and 15 years). As announced in its funding outlook for the year 2022, KfW in March 2022 tapped up one of its euro benchmark bonds to a volume of EUR 7bn for the first time, thus continuing to pursue its goal of increasing the liquidity of its bonds even further.

The volume of private placements tailored to individual investor needs was at an equivalent value of EUR 6bn at the end of June and thus significantly higher as in the same period of the previous year. The development is mainly driven by a considerable increase in the euro callable business due to the ongoing rise in interest rates in the euro area. Furthermore, the demand for niche currencies such as Chinese renminbi and South African rand was once again high in the first half of 2022.

Total green bond issuance volume exceeds EUR 50 bn

The volume of Green Bonds – Made by KfW issued this year amounted to an equivalent of EUR 7.8bn. This includes the most recent green bond transactions (EUR green bond 4 bn / HUF green bond 30 bn / HKD green bond 300m), issued at the beginning of July (as of 30 June 2022: EUR 3.8bn). Thus far, ten green transactions in seven different currencies have been conducted in 2022. KfW had already exceeded the threshold of EUR 50bn total issuance volume of green bonds in April 2022 with the successful issuance of the EUR 3bn green bond. KfW has been active in the green bond market since 2014 and is one of the world's largest issuers of green bonds.
KfW's Green Bond framework, which has been expanded to include a third project category, has been in effect since January 2022. In addition to the project categories renewable energies and energy-efficiency, the new framework now also includes the category of sustainable mobility. It thus addresses the emission-intense transportation sector which has accounted for around 20% of GHG emissions in Germany in recent years.
KfW also continues to be an active investor in green bonds with a targeted green bond portfolio of EUR 2bn to 2.5bn. In the first half of 2022 KfW has made green bond investments totalling around EUR 331m. The portfolio volume currently amounts to approximately EUR 2.3bn.

As a frequent issuer of green bonds and also acting as an investor in green bonds, KfW aims to steer capital investments into green projects and thus to act as a catalyst in order to drive the global transformation process on the capital markets.
With the continued implementation of its Sustainable Finance Concept, KfW also puts a major focus on bringing its new financing activities in line with the Paris Climate Agreement and making the impact of its financings measurable and transparent.

Agility and efficacy essential for crisis management

KfW's goal is to develop into a digital transformation and promotional bank and to operate even more efficiently and effectively in the future. The importance and indispensability of agility and efficacy crystallized not only during the Covid-19 pandemic, but in particular also in the wake of the outbreak of the war in Ukraine. In close cooperation with the German government KfW succeeded in initiating first measures within a few days after Russia's invasion into Ukraine to provide quick and unbureaucratic support to those affected by the war. In the course of the past few weeks, these initiatives have been expanded and primarily target German companies affected by the war or by sanctions, in particular companies in the energy sector.

“The war in Ukraine has enormous humanitarian and economic consequences. Against the backdrop of our political mandate, we take responsibility and contribute to dampening the effects of this war for the affected people and companies," says Stefan Wintels, CEO of KfW.

Due to KfW's involvement in various initiatives to mitigate the economic and social consequences of the war in Ukraine and because of the high demand for promotional funds in the domestic market, KfW is raising its capital market funding target for the year 2022 to EUR 90bn.
As the financial support related to the war in Ukraine also involves short-term bridging measures, KfW also plans to make greater use of its money market activities in the second half of 2022.

Issuances of around 28 bn EUR planned for the remainder of the year

Against the backdrop of rising inflation and the monetary policy turnaround by central banks with declining bond purchases and rising interest rates, KfW expects the environment to remain challenging and capital markets to remain volatile during the remainder of the year. Due to the explicit federal guarantee, the broad diversification of its funding instruments and its excellent access to the capital market, KfW is confident to be able to successfully refinance the remaining targeted volume of around EUR 28bn for 2022 via the capital market even in this volatile environment. Depending on market developments, KfW plans to continue to focus on the strategically important currency US dollar as well as British pound in addition to euro in the 3rd and 4th quarter. Depending on the disbursements under the green bond framework, further green bond issuances are also planned.

New impetus in capital market communications

In view of the Covid-19 pandemic, the past two years have given rise to new digital communication formats in capital market communications. KfW has also made use of this and increasingly digitalised its communication with key stakeholders. In addition to virtual roadshows and investor conferences, new formats such as the Global Investor Broadcast – a semi-annual virtual capital market update in interview format – and topic-related webinars have also found their way into KfW's capital market communications. These formats were very well received by the target group, which is why KfW will continue to use these formats in the future, in addition to personal communication with its stakeholders.

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Portrait Nathalie Cahn