Increasing confidence in Europe is boosting demand also for KfW bonds

• KfW confirms funding volume of EUR 65 to 70 billion for 2025
• KfW bonds are currently benefiting from rising international demand
• Walk the Talk: The digital learning journey continues
• High green bond volumes testify to KfW’s strong commitment as a climate financier

In the first half of 2025, which was characterised by global trade tensions and geopolitical crises, KfW already raised an equivalent of EUR 50.3 billion in the international capital markets to fund its business activities. This represents a significant portion of its announced funding volume for 2025, amounting to EUR 65 to 70 billion.

In view of the steadily improving outlook for the German and European economies, the promotional bank is expecting funding of around EUR 70 billion for the year 2025. It is therefore planning to issue bonds in the amount of up to EUR 20 billion in the second half of the year, also including further green bonds.

Investors appreciate KfW’s broad international positioning

Overall, Europe and KfW as well enjoy a high level of trust among international investors who are looking for liquid investment alternatives from top-rated issuers such as KfW in various currencies. KfW bonds are seen as a “safe haven” investment.

“The improving sentiment and more positive growth forecasts for Europe are also reflected in the increased interest on the part of international investors in bonds from European issuers. In the EUR market, this is certainly also an effect of the expiry of the ECB’s quantitative easing (QE) purchases, followed by enhanced demand from institutional investors,"

explains Tim Armbruster, Treasurer of KfW Group.

“We have been witnessing for some time now that investors increasingly tend to diversify in different currencies. This particularly benefits KfW with its offer of liquid bonds. Especially in the USD market, this is resulting in a narrowing of spreads against US bonds,”

explains KfW’s treasurer.

KfW has taken advantage of this momentum and already issued four USD benchmark bonds with a nominal volume of USD 14 billion in the first half of the year; most recently, it issued a USD bond with a spread of only four basis points above US government bonds. At USD 15.5 billion, it’s total refinancing in USD amounts to around 28% of its funding for 2025 to date.

In addition to the European domestic currency, which as usual accounts for the majority of funding in the first half of the year with net revenues of EUR 27 billion (around 54%), and its USD bonds, KfW has been active in seven other foreign currencies. Highlights include the Hong Kong dollar (HKD), which contributed a record value of an equivalent of over EUR 1 billion to the total funding in the first half of the year, and the Swiss franc (CHF), which made a successful comeback in KfW’s currency portfolio in February this year after a break of over 15 years thanks to favourable market conditions and a positive investor response.

KfW is actively helping to shape the European digital capital market

KfW is continuing its learning journey in another jurisdiction in the area of digitalisation: in June, it issued a second CHF transaction, this time as a digital bond. The bond is listed on the Swiss Stock Exchange (SIX) and is settled via a blockchain in digital Swiss francs, and thus in a wholesale central bank digital currency (CBDC). SDX, the digital infrastructure platform operated by SIX, provides the necessary technological basis for this. Investors have the option of subscribing and trading the bond in the traditional way or in wholesale CBDC.

The issue of the CHF digital bond fits into a series of previous digital capital market initiatives that have attracted a lot of attention for KfW in recent months.

Most recently, KfW invested for the first time in a blockchain-based Pfandbrief bond in the secondary market with the aim of making a targeted contribution to the development of liquidity for DLT-based securities, as the currently very limited liquidity of the fledgling market for crypto securities significantly limits the segment’s scaling potential.

The scalability of digital approaches is very important to KfW as a globally operating player. In this context, the central bank eligibility of DLT-based securities would also be helpful, so that they can be used, for example, for repo transactions. Furthermore, issuers of DLT-based securities in euros would very much welcome the technological capability to settle these securities in central bank money, as the settlement process of such securities is not scalable without connectivity between the securities and the money side.

“In this sense, we assess yesterday's publication by the ECB as positive, as the specification of the timeline for the short-term solution 'Pontes' and the announcement of further experiments and trials until the pilot phase at the end of Q3 2026 represent valuable signals for the market. Additionally, the continuation of the dialogue through established formats such as Contact Groups between the ECB/Eurosystem and the market is also viewed positively, as it lays the foundation for the development of market-oriented solutions,"

stated Tim Armbruster.

In the area of central register securities, scaling is progressing rapidly. So far this year, KfW has issued 36 individual transactions with a volume of around EUR 16 billion as central register securities based on the eWpG via Deutsche Börse's digital post-trading platform D7, which results in a total issuing volume of more than EUR 24 billion since 2024.

All of KfW’s digital transactions are driven by the bank’s overarching goal of increasing efficiency, promoting the competitiveness of the German and European financial markets, and contributing to the development of a digital financial ecosystem.

“Green bonds – Made by KfW” – There is more to come

In addition to digitalisation, the topic of "sustainable financing" remains a core element of KfW’s strategic positioning. This is why the bank is consistently continuing its activities as one of the world’s largest climate financiers. KfW links suitable financing activities to its “Green Bonds – Made by KfW” and is one of the largest issuers worldwide in this area, too.

Recently, KfW exceeded the equivalent of EUR 90 billion in cumulative green bond issuances. In the first half of 2025 alone, it generated net revenue of EUR 9.5 billion by issuing green bonds in seven different currencies. KfW is thereby demonstrating continuity in its green bond volumes, whereas the total issuance volume of green bonds at international level has fallen by around 18% compared with the same period last year.

“Although we have already almost reached our green bond target of EUR 10 billion for 2025, we are planning to issue further green bonds in the second half of the year, depending on available assets. This underlines our continued commitment to mobilising capital market funds specifically for the financing of green projects,”

explains Petra Wehlert, Head of Capital Markets at KfW.

Service:

• Photographs of the people quoted can be found here Photo Archive | KfW

• Detailed figures and charts on KfW’s refinancing in the first half of the year can be found here KfW Investor presentation

• Publications about KfW’s digital learning journey can be found here Digitalization and Innovation in Refinancing | KfW