Financial markets in 2023

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 “Law Concerning KfW”: Federal Republic of Germany’s liability), which is reflected in high credit quality and forms the basis of an excellent financial rating. Outstanding sustainability ratings result from KfW's positioning as one of the leading sustainable promotional banks.

More on KfW’s funding activities

In order to fund its promotional business, KfW raised a record volume equivalent to EUR 90.2 billion in the international capital markets in 2023. A total of 186 transactions were issued in 10 different currencies. One focus was on the issuance of euro bonds, which accounted for 54% of total capital market funding (2022: 65%). At an equivalent of around EUR 26 billion, and a funding share of 29%, the USD funding share was relatively high in 2023.

Moreover, KfW carried out 22 green transactions, raising a net equivalent of EUR 12.9 billion, of which around EUR 10 billion with euro bonds.

“Green bonds – Made by KfW” are firmly anchored in KfW’s overall strategy on the capital market. They form one of the four pillars of KfW funding. KfW has been issuing its “Green Bonds” in various currencies, offering investors the opportunity to specifically combine the security and liquidity typical of KfW bonds with promoting climate action and environmental protection. In December 2023 KfW published its new Green Bond Framework. The new framework, which applies to all “Green Bonds – Made by KfW” issued from 2024, represents a further development in terms of content and strategy of the previous frameworks.

More on “Green Bonds – Made by KfW”

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 players in the money market, particularly through its commercial paper programmes, which serve short-term borrowing and are important for liquidity management for the entire KfW Group. The equivalent of EUR 108.6 billion was raised on the money market in 2023 through the EUR CP and USD CP programmes.

More on KfW’s money market activities

KfW’s liquidity portfolio is part of KfW’s bank-wide liquidity management activities. This portfolio is a bond portfolio geared towards sustainable investment 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. KfW’s liquidity portfolio amounted to EUR 31.4 billion at the end of 2023.

KfW supported climate and environmental action in its Financial markets department by investing EUR 480 million in green bonds in 2023. The priority areas for funding were energy efficiency and renewable energies in Europe in particular. At the end of 2023, the German Federal Ministry for the Environment, Nature Conservation, Nuclear Safety and Consumer Protection (BMUV) and KfW agreed to discontinue KfW’s green bond promotional mandate as the mandate’s objectives were achieved. From 2015 to the end of 2023, KfW mobilised a total of EUR 3.4 billion through 122 investments and contributed to the promotion of green projects with 64 issuers from 16 countries through its exposure. After the promotional mandate expires, KfW will continue to be active as a sustainable investor in the green bond market and will continue to invest in green bonds as part of its liquidity portfolio in the future.

KfW plans to raise funds of EUR 90 to 95 billion via the capital markets in 2024. At least EUR 10 to 13 billion of this amount is to be raised by issuing large-volume Green Bonds in various currencies.

KfW’s holding in Deutsche Telekom AG during the course of 2023 remained unchanged at around 829.2 million shares. This corresponded to approximately 16.6% of the share capital of Deutsche Telekom AG as of 31 December 2023 (13.8% Federal Government, 69.6% free float).

As a result of the sale of 4.0% of Deutsche Post AG shares as part of an accelerated placement process at the beginning of February 2024, KfW’s portfolio of shares in Deutsche Post AG has decreased to 203.9 million shares. This corresponds to a share in the share capital of Deutsche Post AG of 16.5% (83.5% free float).

Legal notice:
The information contained in this online Annual Report 2023 is based on KfW’s Financial Report 2023, which you can download here. Should this online Annual Report 2023, despite the great care taken in preparation of its content, contain any contradictions or errors compared to the Financial Report, the KfW Financial Report 2023 takes priority.