Business sector Financial markets in 2022
KfW Group bundles its long and short-term funding activities and its liquidity, currency, interest rate and asset management for the entire group in the business sector Financial markets. KfW primarily funds its business activities in the international money and capital markets and is one of the world's most active and largest bond issuers.
Its reputation is based on its responsible behaviour and on the Federal Republic of Germany's explicit and direct guarantee (section 1a of the : Federal Republic of Germany’s liability), which is reflected in high credit quality and forms the basis of an . Outstanding result from KfW's positioning as one of the leading sustainable promotional banks.
At around EUR 90 billion, KfW provided the highest funding volume in its history in 2022, in a constantly changing market environment. It funds its promotional business activities via bond issues on the international capital markets.
Focus on liquidity
KfW’s benchmark bonds are characterised by their particularly high liquidity. In times of high market volatility, investors worldwide appreciate this characteristic in particular. The proportion of benchmark programmes in the total funding volume amounted to 63% in 2022.
Customised bonds at record level
A total of 206 transactions were placed in 13 currencies. Against the backdrop of an unexpectedly sharp rise in interest rates during the year, the volume of private placements tailored to special investor needs hit a new all-time high of around EUR 10 billion.
With an issue volume the equivalent of EUR 8.1 billion, KfW is by far the largest foreign issuer in the sterling market and, with the equivalent of EUR 2.1 billion, the largest foreign issuer in the Australian capital market.
KfW was the first issuer to offer a digital issue as a fixed-income central register security on the basis of the Electronic Securities Act (eWpG), making it a pioneer in its market segment.
Expanded funding sources
KfW has used the Economic Stabilisation Fund (WSF) to fund its coronavirus special programmes since 2020. As of November 2022, KfW has also been able to draw on WSF funds to finance the mandated transactions relating to energy in the context of the Ukraine war. KfW utilised funds totalling EUR 20 billion for this purpose in 2022.
Funding of EUR 80-85 billion is planned for 2023, of which at least EUR 10 billion is to be raised via green bonds.
In order to fund its promotional business, KfW raised a record volume of around EUR 90 billion on the international capital markets in 2022. A total of 206 transactions were issued in 13 different currencies. Making up around 12% of the refinancing, 20 “Green Bonds – Made by KfW” (including top-ups) contributed EUR 10.6 billion. The share of bonds denominated in euros was 65% in 2022 (2021: 55%), US dollar-denominated bonds totalled 19% (2021: 26%), making KfW the second-largest US dollar issuer in its market segment in the world.
Milestone: Green bonds pass the EUR 50 billion mark
“Green Bonds – Made by KfW” are strongly anchored in KfW's overarching capital market strategy; they form one of the four pillars of KfW’s funding. KfW issues green bonds in different currencies, offering investors the opportunity to specifically combine the typical security and liquidity features of KfW bonds with promoting climate action and environmental protection.
KfW surpassed the EUR 50 billion mark for total green bond issue volume in April 2022. The volume had reached EUR 58 billion by the end of 2022.
Shaping transformation sustainably
KfW is one of the top three green bond issuers worldwide. “Green Bonds - Made by KfW” were issued in an equivalent amount of EUR 10.6 billion in 2022. This involved carrying out 20 transactions including seven top-ups.
Expanding currency diversity
KfW issued green bonds in a total of 10 currencies in 2022, including two liquid euro green bonds and, for the first time, a green bond in Danish kroner (DKK).
Broadening the framework
International investors have been extremely receptive to the green bond framework, which was expanded in 2022. KfW now also promotes investments in climate-friendly vehicles and infrastructure, in addition to “energy efficiency” and “renewable energy”.
The green bonds issued in 2022, with net proceeds of EUR 10.6 billion, contribute to reducing greenhouse gas emissions by an estimated 2.1 million tonnes of CO2 equivalents annually. This represents a reduction of 195 tonnes of CO2 equivalents for every EUR 1 million issued.
Reinforcing Sustainable Development Goals
All projects financed via KfW Green Bonds count towards at least one of the UN’s Sustainable Development Goals (SDGs).
KfW creates transparency through its allocation and impact report regarding the use of funds from issue proceeds of its green bonds and their environmental impact. The impact report was published in 2022 for green bonds issued in 2019 and 2020.
Short-term funding and liquidity management
KfW ensures the liquidity of the entire KfW Group via the global money and capital markets. KfW is one of the world's most active participants in the money market, particularly through its international commercial paper programmes, which serve short-term borrowing and are important for liquidity management for the entire group. A total of EUR 176.6 billion (equivalent) was raised on the money market in 2022 through the EUR CP and USD CP programmes.
KfW's liquidity portfolio is part of its bank-wide liquidity management activities. This portfolio is a bond portfolio based on sustainable investing criteria, which comprises only bonds from public-sector issuers and supranational organisations as well as bank bonds, Pfandbriefe (German covered bonds), asset-backed securities (ABS) and asset-backed commercial papers (ABCP), which have an investment-grade rating. The KfW liquidity portfolio comprised EUR 35.4 billion at year-end 2022.
Promotional business via the capital markets
KfW supported climate action and environmental protection by investing EUR 415 million in green bonds. The funding focused on the promotional priority areas of energy efficiency and renewable energy in Europe.
Long-term borrowing via the capital markets of EUR 80 to 85 billion is planned for 2023. At least EUR 10 billion of this amount is to be raised by issuing large-volume green bonds in various currencies.
Special tasks commissioned by the Federal Government
KfW's holding in Deutsche Telekom AG remained unchanged over the course of 2022 at around 829.2 million shares. This corresponded to 16.6% of the share capital of Deutsche Telekom AG as of 31 December 2022 (Federal Government 13.8% and free float 69.6%).
KfW's holding in Deutsche Post AG remained unchanged over the course of 2022 at 253.9 million shares. This corresponded to around 20.5% of the share capital of Deutsche Post AG as of 31 December 2022 (free float 79.5%).
The information contained in this online Annual Report 2022 is based on KfW’s Financial Report 2022, which you can download Should this online Annual Report 2022, despite the great care taken in preparation of its content, contain any contradictions or errors compared to the Financial Report, the KfW Financial Report 2022 takes priority.