KfW Press Briefing Capital Markets 2016/2017 Frankfurt, 12 December 2016
Key financial figures for KfW Group (IFRS) 2014
2015
9M/2016
Business activities (in EUR bn) – for the period Promotional business volume
74.1
79.3
54.6
Operating result before valuation & promotional activities
2,023
2,066
1,458
Consolidated profit
1,514
2,171
1,348
Consolidated profit before IFRS effects from hedging
1,467
1,900
1,391
489.1
503.0
497.2
21.6
25.2
26.3
572.5
587.2
595.6
Tier 1 capital ratio
14.1%
18.3%
21.7%
Total capital ratio
15.1%
18.4%
21.7%
Income statement key figures (in EUR mn) – for the period
Balance sheet (in EUR bn) – at the end of the period Total assets Equity Volume of business Key regulatory figures (in %)(1) – at the end of the period
(1) The
corresponding IRBA ratios were calculated voluntarily for internal purposes on the basis of the relevant legal provisions and taking the annual/quarterly results into consideration. KfW no longer discloses any Tier 2 capital in its equity, as a result of which the core Tier 1 capital ratio and the total capital ratio as of 30 September 2016 are the same.
Capital Markets Press Briefing 2016/2017 ▪ Frankfurt ▪ 12 December 2016
2
Political events set tone for funding in 2016 Turbulent market conditions 1.2
2.6
1
2.4
0.8 2.2 0.6
US election 2 yield in %
yield in %
0.4 0.2 0
1.8 1.6 Brexit referendum
-0.2 1.4 -0.4 1.2
-0.6
1
-0.8 1Y
2Y
3Y
4Y
5Y
6Y
Bund yield curve Jan 2016 Bund yield curve Dec 2016*
7Y
8Y
9Y
10Y 15Y 20Y
Jan 2016 Mar 2016 May 2016 Jul 2016
Bund yield curve Jul 2016
All-time low in 10 yr Bund yield after Brexit – strong rebound in Q4
Sep 2016 Nov 2016
10 year US Treasury
US Treasuries jump after presidential elections
* as at 08/12/2016
Capital Markets Press Briefing 2016/2017 ▪ Frankfurt ▪ 12 December 2016
3
KfW - a solid issuer in challenging times 2016: USD again the major funding currency JPY NOK 2% 1%
AUD 3%
Others 2%
2016
100%
6%
88 transactions
25%
100 transactions
69%
14 transactions
90% 80% 70%
GBP 8%
60% 50% USD 48%
EUR 36%
40% 30% 20% 10% 0%
› › › › › ›
Private Placements Public Transactions Benchmarks
EUR 72.0 billion funded in 2016 year-to-date in 15 currencies and 202 single transactions 11 benchmark bonds (plus 3 EUR-taps) in EUR and USD account for 69.1% of total funding KfWʼs diversified market approach allows for flexible funding operations focused on investorsʼ needs Subdued liquidity in secondary markets due to ECBʼs unprecedented QE measures USD strongest funding currency, followed by EUR, GBP and AUD. HKD, SGD and MXN back in KfW funding mix in 2016 Highest GBP volume since 2008
All numbers as at 08/12/2016
Capital Markets Press Briefing 2016/2017 ▪ Frankfurt ▪ 12 December 2016
4
Investors rush into USD market hunting for positive yields Prime example: KfW USD 6 billion Benchmark, 2-year maturity, 0.875% coupon Terms and Conditions
Lead Managers
ISIN:
US500769GY46
BNP Paribas, Citi, Nomura
Issuer:
KfW
Guarantor:
Size:
Federal Republic of Germany Aaa – stable (Moody’s) AAA – stable (Scope) AAA – stable (S&P) USD 6,000,000,000
Settlement Date:
April 13, 2016
Maturity Date:
April 19, 2018
Coupon:
0.875% p.a. payable semiannually
1st Coupon at:
October 19, 2016
Re-Offer Price:
99.767%
Re-Offer Yield:
0.992% s.a.
Mid-Swap Spread:
+ 14 bp
Benchmark Spread:
UST 0.875% March 2018 + 25.75 bp
Format:
Global/ SEC registered
Listing:
Luxembourg
Rating:
Selling Group FTN Financial, Commerzbank, Deutsche Bank Execution Highlights •
With its 3rd USD-Global offering in 2016 KfW underlines its leadership in providing liquidity to the market. The 2-year bond is already the third KfW issue with a notional of USD 6 bn.
•
The very strong demand throughout the bookbuilding required to tighten the spread by an unusual 3bp to 14bp over midswaps. The final orderbook was at USD 9 bn with 110 individual orders.
•
The very equal regional split of the final orderbook underlines the strong followership KfW enjoys from investors around the globe.
Distribution by regions
Distribution by investor types
4%
12% 30%
Asia (30%) Central Banks (64%)
Europe (29%)
37%
Americas (37%)
24%
MEA (4%)
Banks (24%)
64%
Asset Managers (12%)
29%
Capital Markets Press Briefing 2016/2017 ▪ Frankfurt ▪ 12 December 2016
5
Negative yields weigh on EUR market Prime example: KfW EUR 5 billion Benchmark, 5-year maturity, 0.00% coupon Terms and Conditions ISIN:
DE000A2AARZ5
Issuer:
KfW
Guarantor:
Size:
Federal Republic of Germany Aaa – stable (Moody’s) AAA – stable (Scope) AAA – stable (S&P) EUR 5,000,000,000
Settlement Date:
07 June 2016
Maturity Date:
30 June 2021
Coupon:
0% p.a.
1st Coupon at:
30 June 2017
Re-Offer Price: Re-Offer Yield:
100.998% -0.196% p.a.
Mid-Swap Spread:
mid-swaps -22
Benchmark Spread:
OBL 0% due Apr. 2021 + 15.1 Bp.
Format:
Global / SEC registered
Rating:
Listing:
Lead Managers
Senior Seller
Commerzbank
Barclays, Crédit Agricole, DZ Bank, LBBW, NordLB, Unicredit
Goldman Sachs RBS
•
KfW successfully launched its third EUR benchmark in the funding year of 2016. The bond has a maturity of 5 years and offered an attractive pick-up with a spread of 15 bps vs Bund.
•
The total orderbook grew quickly and finally closed in excess of EUR 8.3 billion already after 3 hours. Despite the negative yield this represents the greatest demand for a KfW bond of this tenor during the previous 5 years.
•
The high quality orderbook consisted of more than 130 orders in total. The demand was dominated by bank treasuries with 51%, followed by asset managers (25%) and central banks (21%). Distribution by investor types
Germany (31%)
2%
Banca Akros, BayernLB, Danske, Deka, ING Execution Highlights
Frankfurt Distribution by regions 11%
Seller
2%
Banks (51%)
UK (11%)
7%
31%
Benelux (7%)
25%
Central Banks (21%)
France (21%)
3%
Central and Eastern Europe (7%)
7%
51%
Switzerland (3%)
Ins. & Pension Funds (2%)
Americas (7%) 11% 21%
7%
Asset Managers (25%)
Asia (2%) Others (11%)
Capital Markets Press Briefing 2016/2017 ▪ Frankfurt ▪ 12 December 2016
21%
Others (1%)
6
KfW’s global investor base 2016 Exceptional yield environment shapes investor distribution EUR: European demand picking up
USD: Central banks on the rise Distribution by region
in % 50
Distribution by regions
in % 60 50
40
40
30
30 20
20
10
10 0
0 2011 2012 Asia Americas in % 70
2013 MEA Other
2014 2015 Europe
2011 2012 2013 Europe ex Germany Asia Other
2016
in %
Distribution by investor type
2015 2016 Germany Americas
Distribution by investor type
60
60
2014
50
50
40
40 30
30
20
20
10
10
0
0 2011
2012
Central Banks Ins. & Pension
2013 Banks Other
2014
2015
2016
Asset Mgt.
Capital Markets Press Briefing 2016/2017 ▪ Frankfurt ▪ 12 December 2016
2011
2012
Central Banks Ins. & Pension
2013 Banks Other
2014
2015
2016
Asset Mgt.
2013 – 2016: based on allocation. 2010-2012: based on orders.
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KfW’s ratings and awards Top credit ratings
AAA
Aaa
AAA
Excellent ESG ratings out of
5. 116
Prime status
out of
5. 412
Awards
The World‘s Safest Bank
Most Impressive Funding Team in its Sector
Kangaroo SSA Bond Deal of the Year & Kauri Bond Deal of the Year
Best Overall Issuer Best SRI Best Green Bond Issuer Bond Best Debt Investor Relations
Capital Markets Press Briefing 2016/2017 ▪ Frankfurt ▪ 12 December 2016
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The Green Bond market has seen dynamic growth since 2012 Total issuance of Green Bonds (in EUR billion)
2%
70
Banks
21% 46%
60
Corporates Supras/Agencies
31% Provinces/Municipalities
50 40
65
30
China
20
12% 9%
32 24
10
2
10
2012
2013
11% 26%
Europe 42%
Supranationals North America
0 Data as at 02/12/2016
2014
2015
2016ytd
Other
Source: Bloomberg
› ›
Total market volume is currently at EUR 129 billion
›
Further participants are taking a stake in the market (e.g. rating agencies, exchanges, index providers)
Diversification in terms of issuer types (banks, corporates, municipalities), countries (e.g. China), and products (Green ABS, Green Covered Bonds)
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Green Bonds – Made by KfW Highlights of KfW’s green bond issuances › Net proceeds are used for financing projects under KfW’s “Renewable Energies – Standard” – loan programme.
› Inaugural KfW green bonds in 2014 were award-winning transactions.
› 2014-2016: 10 bonds (and one tap) issued with an equivalent of EUR 9.2 bn.
› Total Green Bond funding ytd. equates to about 5% of total funding (2014-2016).
› Established Green Bond curves in EUR and USD. › EUR, USD, AUD, GBP and SEK with potentially more currencies to come in 2017.
› Large and liquid sizes in benchmark maturities not exceeding the average duration of the qualifying assets (2015: 8.6 years).
› KfW’s Green Bond Portfolio reached a volume of EUR 579 m in 2016 and will be extended to EUR 1 bn going forward.
Capital Markets Press Briefing 2016/2017 ▪ Frankfurt ▪ 12 December 2016
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KfW well positioned in international debt markets Funding volume for 2017 with EUR ~ 75 billion at stable heights
Funding volume (in EUR billion)
90 80
78.7 72.0
~75
65.4
70
57.4
60
62.7
50 40 30 20 10 0 2012
2013
Benchmark Bonds
2014
2015
Public Transactions
Capital Markets Press Briefing 2016/2017 ▪ Frankfurt ▪ 12 December 2016
2016 yearto-date
2017
Private Placements
11
KfW’s funding: three pillar strategy A well-structured range of products offers suitable opportunities for various investors’ needs
2016 ytd: EUR 72.0 bn 2017 target: EUR ~ 75 bn Benchmark programme
› Large and liquid bonds in EUR and USD
› At least 3, 5 and 10 year benchmark maturities each year
› Target benchmark sizes: › EUR 3 – 5 bn › USD 3 – 5 bn
Other public transactions
› Large and liquid bonds › in non-benchmark maturities with or without call option (EUR and USD)
Private placements
› Customized bonds for investor needs
› Flexible in currency, structure and maturity
› in strategic markets (GBP, AUD, SEK, JPY, CNH, NOK, CHF …)
› in further currencies
› Green Bonds › Other structured public
bonds in various currencies
Capital Markets Press Briefing 2016/2017 ▪ Frankfurt ▪ 12 December 2016
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Disclaimer
This document is provided for information purposes only. This document may not be reproduced either in full or in part, nor may it be passed on to another party. It constitutes neither an offer nor an invitation to subscribe or to purchase securities, nor is this document or the information contained herein meant to serve as a basis for any kind of obligation, contractual or otherwise. In all legal systems this document may only be distributed in compliance with the respective applicable law, and persons obtaining possession of this document should familiarise themselves with and adhere to the relevant applicable legal provisions. A breach of these restrictions may constitute a violation of US securities law regulations or of the law applicable in other legal systems. The information contained in this document is historical and speaks only as of its date. KfW disclaims any intention or obligation to update or revise the information contained in this document. By accessing this document you acknowledge acceptance of these terms.
Capital Markets Press Briefing 2016/2017 ▪ Frankfurt ▪ 12 December 2016
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