Rely on the safe haven.
KfW Bonds - Rely on the safe haven / September 2021 1 Haftungsausschluss / Disclaimer
Die in diesem Dokument enthaltenen Informationen stellen kein Angebot zum Kauf von Wertpapieren in den USA dar. Wertpapiere dürfen in den USA nur mit vorheriger Registrierung oder ohne vorherige Registrierung nur aufgrund einer Ausnahmeregelung verkauft oder zum Kauf angeboten werden. Ein Angebot zum Kauf von Wertpapieren wird in den USA nur auf Grundlage eines Prospekts erfolgen, der von der KfW zur Verfügung gestellt wird und detaillierte Informationen über KfW, ihre Geschäftsleitung, ihre Jahresabschlüsse sowie Informationen über die Bundesrepublik Deutschland enthalten wird.
The information contained in this document does not constitute an offer of securities for sale in the United States. Securities may not be offered or sold in the United States absent registration or an exemption from registration. Any offering of securities in the United States will be made by means of a prospectus that may be obtained from KfW and will contain detailed information about KfW and its management, financial statements and information about the Federal Republic of Germany.
KfW Bonds - Rely on the safe haven / September 2021 2 KfW: Overview and Recent Developments
KfW Bonds - Rely on the safe haven / September 2021 3 KfW in brief
Germanyʼs Professionally Shareholders flagship German credit supervised and German development federal regulated agency states 20% Federal › The promotional bank of the Federal Republic of (1) Republic Rating of Germany Germany, established in 1948 as a public law 80% institution. Credit › Benefits from explicit and direct statutory guarantee and institutional liability by the Aaa Moody‘s Federal Republic of Germany. Headquarters: Frankfurt am Main Scope AAA Branches: Berlin, Bonn › Regulated by the "Law concerning KfW" and S&P exempt from corporate taxes. AAA
› Zero risk weighting of KfW’s bonds.(2) Sustainability › Supervision by the German Federal Ministry of imug Finance and the German Financial Supervisory BB Frankfurt Berlin Authority "BaFin". "Prime" ISS ESG › Subject to certain provisions of German and Negligible Sustainalytics European bank regulatory laws by analogy, in large Risk part with effect from January 1, 2016. AAA MSCI (1) A rating is not a recommendation to buy, sell or hold securities. Ratings are subject to revision or withdrawal at any time by Bonn Cologne (DEG) the assigning rating organization. Each rating should be evaluated independently of any other rating. (2) According to the standardized approach of the Capital Requirements Regulation (CRR) KfW Bonds - Rely on the safe haven / September 2021 4 Worldwide presence 7,382 About 80 representative offices Number of KfW employees
1948 1950 1960 1970 1980 1990 2000 2010 2016 2018 2020
Bonn Cologne Moscow London Berlin Brussels Chişinău Kyiv Frankfurt Belgrad Mazar-e-Sharif Ulan Bator Sarajevo Priština Tiflis Istanbul Taschkent Bishkek New York Podgorica Baku Beijing Ankara Dushanbe Tirana Skopje Yerevan Tunis Islamabad Rabat Beirut Kabul Ramallah-Al-Bireh Amman New Delhi Kathmandu Cairo Abu Dhabi Dhaka Hanoi Mexiko City Mumbai Rangoon Tegucigalpa Niamey Vientiane Guatemala City Dakar Bamako Sanaa Abidjan Bangkok Manila San Salvador Managua Ouagadougou Phnom Penh Addis Abeba Ho Chi Minh City Cotonou Bogotá Lomé Yaoundé Kampala Singapore Accra Quito Kigali Nairobi Kinshasa Bujumbura Daressalam Jakarta
Lima Lusaka Lilongwe La Paz Brasilia
Windhoek São Paulo Pretoria Maputo
Johannesburg
KfW Bonds - Rely on the safe haven / September 2021 5 KfW Group’s business activities New business 2020: EUR 135bn (+75% yoy)
SME Bank & Private Clients Customized Finance & Public Clients KfW Capital
Standardized financing products for SMEs, Individual financings for municipal & social Subsidiary (100%, est. 2018) to carry out KfW’s Domestic business founders, start-ups, self-employed infrastructure, customized financing for FI & entire private equity & venture capital business professionals and private individuals promotional institutes of German federal states
64% 14% 1%
Promotion of Developing Countries Export & Project Finance Financial Markets
& Emerging Economies (KfW IPEX-Bank) International
KfW’s public (KfW Development Bank) & private Green Bond Portfolio Subsidiary (100%, est. 2007) for exports and sector activities (DEG) in developing countries project & corporate financing world-wide
9% <1% 12%
New business for New business for SMEs in Environment environment and climate Domestic % of total new domestic 33%* protection in % of total new 48% investment ratio: SME ratio: business volume. business volume.
*excluding Covid-19 related loan facilities: 50% Based on 2020 data.
KfW Bonds - Rely on the safe haven / September 2021 6 Proven and successful business model KfW involves commercial banks in its domestic activities
Backed by Understanding II reached with EU Commission
KfW Bonds - Rely on the safe haven / September 2021 7 Allocation of the economic capital for credit risk Strong focus on Germany and financial industry due to business model
2% 2% 1% 1%1%1% 3% 1% 1% 2%1% 2% 4% 5% Germany Financial sector
Euro-area countries (excl. Financial Germany) investment/funds EU countries (excl. euro-area Consumer countries and Germany) By region Europe outside EU By sector Energy/environment
Africa Public Sector
Asia (incl. Australia and New Transport infrastructure Zealand) 87% Latin America 86% Essential goods
North America Other
Exposure to Exposure to 87% 86% Germany: financial sector:
Based on year-end 2020 data.
KfW Bonds - Rely on the safe haven / September 2021 8 SDG-MAPPING of KfW Groupʼs new business in 2020 A contribution to all of the United Nationsʼ Sustainable Development Goals
100% of KfW financing commitments are attributed to at least 1 SDG
› SDG 7 - Affordable and clean energy: Pledges reached EUR 40.5 billion - also an increase of 53% compared to the previous year (EUR 26.4 billion).
› SDG 8 - Decent work and economic growth: In the course of the pandemic-related support measures for the economy, KfW increased its financing commitments by 156% to EUR 71.9 billion compared to the previous year (EUR 28.1 billion).
› SDG 11 - Sustainable Cities and Communities: Commitments reached EUR 46.0 billion - an increase of 58% compared to the previous year (EUR 29.0 billion).
› SDG 13 - Climate action: Commitments reached EUR 43.2 billion - an increase of 53% compared to the previous year (EUR 28.2 billion).
KfW Bonds - Rely on the safe haven / September 2021 9 Sustainability has been and remains one of KfWʼs top priorities Manifold activities to improve sustainabilty and to act as vocal advocate - examples
Setting new corporate targets: KfW shall remain among top-performer in ESG ratings by renowned int’l ESG rating agencies
Improving lending business: Developed a group-wide KfW Roadmap Sustainable Finance: ‒ Improvement of impact evaluation of KfW’s business (e.g. SDG mapping) ‒ Assessment of sustainability control elements in bank steering ‒ Consideration of ESG and climate risks in internal risk management process "Sustainability has always been an important part of our DNA. KfW is Financing landmark projects: sustainable in a holistic sense, Clean Ocean Initiative (KfW, EIB and AFD; 2018) i.e. our understanding of – EUR 2bn for sustainable projects to reduce the pollution sustainability goes far beyond environment and climate protection. " in the world’s ocean within the next 5 years – Focus on river and costal areas of developing countries Dr. Günther Bräunig, CEO in Asia, Africa, and the Middle East
Engaging in global initiatives: ‒ PRI – Principles for Responsible Investments signatory ‒ Green Bond Principles Executive Committee member – TCFD – Task-Force on Climate-related Financial Disclosure supporter
KfW Bonds - Rely on the safe haven / September 2021 10 Business performance
135.3 bn EUR 546.4 bn EUR 0.5 bn EUR Total promotional business Total assets at 31 Dec 2020 Consolidated profit 2020 volume 2020 • About 79% domestic and 21% international • Among top 3 of Germany’s largest credit 2020 profit largely affected by the pandemic. business. institution in terms of total assets. Operating result, however, very stable. • 2020: 38% COVID-19 aid on behalf of gov’t.
135.3 546 547 472 486 506 1.6 COVID- 1.4 1.4 1.4 76.5 75.5 77.3 19 aid
49.8
Strategic
EUR EUR
EUR target (before bn bn 0.5
bn IFRS effects)
in in in in in
2017 2018 2019 2020 H1/2021 2017 2018 2019 2020 H1/2021 2017 2018 2019 2020 H1/2021
Tier 1 Capital Ratio at end of period 24.1 24.1 21.3 20.6 20.1 The increase of the Tier 1 capital ratio of KfW as 20 of December 31, 2020, is primarily due to the 15 transition to a new system for calculating credit risk indicators in pillar I as part of the Internal 10 IRBA approved Ratings-Based Approach (IRBA) approval 16.6 process. 5 BaFin minimum requirement 0 2017 2018 2019 2020 H1/2021
KfW Bonds - Rely on the safe haven / September 2021 11 Economic risk-bearing capacity of KfW Large share of tier 1 capital reflects high quality of KfW’s financial resources. Very sound capital basis.
Credit Equity Market Operational Project 57 Capital 1,400 risk investment risk risk risk risk (91) buffer for (1,200) model risk
15,849 (14,467) Economic capital requirements
9,494 516 3,689 693 (8,539) (518) (3,275) (844)
30,372 (29,775) Internal Capital
14,523 (15,308) Excess coverage
figures 2020 in EUR m (figures 2019)
KfW Bonds - Rely on the safe haven / September 2021 12 Key financial figures of KfW Group (IFRS) Solid business performance
2020 H1/2020 H1/2021
Business activities (in EUR bn) – for the period Promotional business volume 135.3 76.2 49.8
Income statement key figures (in EUR m) – for the period
Operating result before valuation & promotional activities 1,855 967 915 Consolidated profit 525 -576 1,396 Consolidated profit before IFRS effects from hedging 633 -392 1,466
Balance sheet (in EUR bn) – at the end of the period Total assets 546.4 522.3 547.4 Equity 31.8 30.9 33.4 Volume of business 673.8 652.2 684.9
Key regulatory figures (in %) – at the end of the period Tier 1 capital ratio 24.1% 23.5% 24.1% Total capital ratio 24.3% 23.7% 24.1%
KfW Bonds - Rely on the safe haven / September 2021 13 KfW – Highlights of lending business 2020 & H1/2021
KfW Financings (in bn Euro) Business Highlights FY 2020 & H1/2021
› 2020: record level of EUR 135.3bn (+75% yoy) in promotional activities, thereof almost 38% COVID-19 support measures › H1/2021: New business -35% yoy due to reduced Covid-19 support H1/2021 41.1 49.8 measures; very strong domestic lending (+100% vs pre-Covid level) › 2020: record level of ~EUR 45bn for climate and environmental protection, 47% of new domestic business for SMEs Domestic › In 2020, COVID-19 support measures boost domestic business: +145% yoy 2020 106.4 16.612.4 135.3 › Strong demand for energy-efficient housing in 2020 & H1/2021 › Despite the crisis, topics with relevance for the future pursued: VC for young +75% companies, energy efficiency, infrastructure and digitization International 2019 43.4 22.1 10.6 › Because of COVID 19, commitments in the Export and project finance business sector were down (2020: -25%, H1/2021: -42% yoy) › In 2020, financings in developing and emerging markets increased to cushion COVID-19 pandemic impact: +16%; H1/2021: -5% yoy Domestic promotional business Export & Project Financing Financial Markets Financings Developing and Emerging Economies › In 2020, KfW invested EUR 0.4bn in green bonds to support climate change Capital market-related financing mitigation and environmental protection (H1/2021: EUR 0.4bn)
KfW Bonds - Rely on the safe haven / September 2021 14 COVID-19 related loan facilities Focus on supporting the German economy on behalf of the German government
KfW Special Programme 2020 Facts and Figures (2020 & H1/2021)
− On behalf of the government and part of a compre- − About 143,000 applications totalling ~ € 66.7bn. hensive package of measures. Launched in March. − 99% of all applications for loans < € 3m − Loan facilities as liquidity aid for businesses in − 47 applications for direct lending totalling ~ € 16bn, Germany affected by the COVID-19 pandemic. Precondition: no financial difficulties at end of 2019. − 99% of all applications already processed − Promotional terms are significantly modified in order − Commitment volume: ~ € 52bn* to facilitate the approval and extension. − Average loan amount: ~ 380k
On-lending loan via commercial banks Direct lending in consortium No risk assessment Fast-track risk assmt Ordinary risk assmt Loan Already Commitment Loans < EUR 800k Loans < EUR 100m Loans > EUR 25m applications processed volume max. 80% of total Risk: 100% govt Risk: 80/90% govt 20/10% bank Risk: 100% govt 143k 99% €52bn*
*Additional 5.4bn EUR related to COVID 19 measures have been committed in KfW's promotional activities in developing and emerging economies.
KfW Bonds - Rely on the safe haven / September 2021 15 Funding at KfW
KfW Bonds - Rely on the safe haven / September 2021 16 KfW’s funding highlights in H1 2021
EUR 50.5bn 14 currencies 65% 40% above last year‘s H1 level. via 136 transactions underpin via 6 highly liquid benchmark KfW’s global approach in DCM. transactions (plus 7 taps) in EUR and USD.
EUR Benchmarks USD Global Bonds Green Bonds dominate (EUR 20bn) amid ultra KfW’s excellent access to $- EUR 7.6bn in total. EUR 4bn 8y low yields. Super large order market allows to issue three Green Bond was the largest books and inaugural 15y bonds with $5bn each. issued by any non-sovereign SSA transaction. issuer.
COVID -19 Gov´t Funds Emerging Markets New Reference Rates GBP EUR 100bn programme size of Remarkable very fine tailor-made Inaugural SOFR-linked and whichEUREUR 39bn have been placements in CNY, HK$USD and SONIA-linked FRNs in H1. First drawn to provide COVID aids to ZAR. Significant increase of €STR-linked FRN already back in the public. MTNs vs previous year. 2019.
KfW Bonds - Rely on the safe haven / September 2021 17 Refinancing during the COVID-19 pandemic
KfW‘s refinancing via international capital markets Supplementary refinancing options
DCM funding not affcted by Examples COVID-19 related financings Refinancing of the COVID-19 related financings through € KfW teamed up with German the German Federal Government govt to refinance COVID-19 related financings -> ring- Federal Government enables refinancing of fenced, no effect on KfW’s up to EUR 100bn through the Economic DCM funding needs. Stabilisation Fund (WSF). Short-term prefunding by KfW, replaced by long-term Excellent market access funding through WSF. Close coordination at all times with Federal Ministry of Finance & German DMO; 2020: approx. EUR 38.9bn. KfW had and has an excellent access to DCM, Commercial paper programmes especially in uncertain Access to money market secured through times. Impressive demand two CP programmes, US-CP recently for KfW bonds from a increased to USD 20bn. wide range of investors. Euro system Transparent communication In June 2020, KfW for purely economical Very clear and transparent reasons participated in TLTRO III in the communication to investors amount of EUR 13.4bn. and other stakeholders.
KfW Bonds - Rely on the safe haven / September 2021 18 Explicit and direct guarantee from the Federal Republic of Germany Basis of KfW’s funding
Guarantee established in 1998
Defined by law
Direct, explicit and unconditional
§1a of the Law concerning KfW: The Federal Republic guarantees all obligations of KfW in respect of loans extended to and debt securities issued by KfW, fixed forward transactions or options entered into by KfW and other credits extended to KfW as well as credits extended to third parties inasmuch as they are expressly guaranteed by KfW.
KfW Bonds - Rely on the safe haven / September 2021 19 Top notch financial ratings from leading rating agencies Moody's, Scope Ratings and Standard&Poor's have assigned triple-A ratings to KfW
Solicited Ratings Unsolicited Ratings
KfW’s strength Largest public Strong and explicit Germany’s Flagship Direct and unlimited statutory development bank with linkages between KfW and Development Bank guarantee and maintenance stable core operating the Federal Republic of obligation drives ratings. performance and solid Germany Solid asset quality benefits from risk profile on-lending. Strong funding based on ‘safe- Aaa Outlook stable AAA Outlook stable AAA Outlook stable haven‘-status. Last update: Short-term: P-1 Short-term: S-1+ Short-term: A-1+ AAA Outlook stable Nov 2020 KfW’s strengths KfW’s strengths KfW’s strengths Strong ownership support in the Explicit and direct statutory Timely and sufficient extraordinary form of a direct guarantee from the guarantee and institutional liability support from German government. KfW’s strength German government. from the Federal Republic of Integral link with the government. Maintenance obligation of the Germany. German government. Low liquidity risk, given the good Explicit guarantee from the market access & fallback options. KfW operates in a prudent manner Federal Republic & institutional High asset quality & low default Low asset risk from the bank's & complies with capital and risk liability. rates. domestic promotional lending management requirements. Low-risk assets, comprising Stable annual net income. business predominately secured loans. Access to capital markets is very Diversified, low-interest funding. Mandatory profit retention good and sustainable. Outlook stable AAA Last update: safeguards strong capitalization. Nov 2020 Last update: Aug 2021 Last update: Sep 2020 Last update: Aug 2021
Top credit standing is recognized by the three mandated rating agencies and by further unsolicited agencies
A rating is not a recommendation to buy, sell or hold securities. Ratings are subject to revision or withdrawal at any time by the assigning rating organization. Each rating should be evaluated independently of any other rating.; KfW Bonds - Rely on the safe haven / September 2021 20 Top ESG ratings confirm KfW’s holistic sustainability approach Renown international rating agencies assign KfW to be among top-performers in ESG
AAA A+ 10 0 Leader 4.3 KfW is among KfW is among KfW’s rating is KfW is among 5.8 7.7 Leader the 2 best out the best-rated at the highest Industry 5.5 the best-rated Leader of 24 develop- BB institutions in level possible development B- ment banks its peer group Industry banks BB Prime AAA Top 5 D D- 0 > 40 KfW’s strengths KfW’s strengths KfW’s strengths KfW’s strengths Profound measures regarding the KfW received a rating of B- (on a In 2019, KfW received a rating of KfW is rated in the lowest ESG management of ESG issues. scale of A+ to D-) in the ISS ESG AAA (on a scale of AAA-CCC) in Risk Rating category (="negligible Corporate Rating. Prime standard the MSCI ESG Ratings risk") within its peer group and Performance regarding within its peer group. assessment. rated banks globally. environmental, governance and sovial criteria is above average. KfW continues to demonstrate strong sustainability performance.
Last update: March 2, 2020 Last update: July 19, 2021 Last update: Mar 23, 2021 Last update: September 29, 2020
KfW has set a new strategic objective of achieving top sustainability rankings among its peers.
A rating is not a recommendation to buy, sell or hold securities. Ratings are subject to revision or withdrawal at any time by the assigning rating organization. Each rating should be evaluated independently of any other rating. KfW Bonds - Rely on the safe haven / September 2021 21 Increasing importance of debt capital markets for KfW
Share of funds from debt capital markets In % of total sources of funds 99% 88% 78%
KfW’s funding volumes 50% at debt capital markets 75-80 2021e In euros in billions 66 2020
KfW Bonds - Rely on the safe haven / September 2021 22 How do we issue a benchmark bond in a responsible manner?
Preparation Issuance
Price Basic terms Timing Syndicate Allocation determination
−Currency: EUR or −Approx. once per −Choose 3 or 4 banks −EUR: −Equal treatment USD month / lead arrangers announcement and within each investor − Maturity: − Short issuance criteria: pricing in general type 2 to 10 years windows −Expert knowledge within a day −Central banks in issuance −USD: −Banks activities announcement and
Issuance −Asset manager −Diversification with pricing in general −Insurance regard to investor over two days
KfW KfW companies access / → first indicative relationship orderbook
−Internal: −Internal: liquidity −Business −Pricing depends on −Buy-and-hold duration on needs, Black-out relationship final issuance investors preferred credit/asset side periods −Secondary trading volume −Early orders
− External: −External: event risks of KfW bonds −Safeguarding preferred Factors investor demand −regular: −Quality of performance on e.g. interest rate consulting secondary market decisions ECB −Other business −singular: relationship
Influencing Brexit
KfW Bonds - Rely on the safe haven / September 2021 23 Wide selection of products addressing investor needs
KfW Benchmark Programmes Green Bonds – Made by KfW − Large and highly liquid bonds, − Liquid green bonds, diversified highly diversified investor base SRI investor base − Regular offerings and taps − Focus: € and $ − Size: 3–5bn (6bn incl. taps, euro only) − Regular offerings and taps − €: 3, 5, 7, 10 and 15y − Private placements possible − $: 3, 5 and 10y Format: EMTN, Global, Kangaroo, US-MTN Format: EMTN, Global
€ $ € $ ₤ A$ NOK SEK HK$... €65.9 bn Aug 31, 2021 Additional Public Bonds Tailor-made Placements − Large and liquid bonds, − Customized products for diversified investor base investor needs − Tenors from 1 to 30y − Flexible in currency, structure − Liquid curves and strategic and maturity approach in ₤ and A$ − Uridashi transactions − Regular offerings and taps Format: EMTN, US-MTN, NSV, SSD Format: EMTN, Global, Kangaroo, Kauri
€ $ ₤ A$ NZ$ C$ SEK NOK € $ ¥ HK$ Mex$ CN¥ ZAR …
KfW Bonds - Rely on the safe haven / September 2021 24 Strong presence in debt capital markets
Funding volume (EUR in billions) Capitalization (as of December 31, 2020)
80.6 78.2 76.1 4.5 6% 5.1 3.6 66.4 14.0 13% 15.5 22.1 4.8 3.8 EUR 65.9bn 3.7 1.6 8.4 9.7 Aug 31, 2021
8.1 8.3 8.1 8% Total €528bn
55.4 55.4 45.9 44.8 44.3 73%
2017 2018 2019 2020 Jan - Aug 2021 Capital Markets Money Markets KfW Benchmark Programmes Green Bonds - Made by KfW Other Liabilities Equity Additional Public Bonds Tailor-made placements (primarily collateral from derivative transactions) Difference to Funding Target
KfW Bonds - Rely on the safe haven / September 2021 25 KfW’s funding by currencies and instruments Benchmark bonds are key – core currencies euro and US dollar Instruments Currencies (in %) (in %) 80 70 14
70 60 12 60 50 10 50 40 8 40 30 6 30 20 4 20
10 10 2
0 0 0 Benchmark Green Additional Tailor-made EUR USD GBP AUD JPY Others Programmes Bonds Public Bonds placements 2018 (EUR 76.1bn) 2019 (EUR 80.6bn) 2020 (EUR 66.4bn) Jan - Aug 2021 (EUR 65.9bn)
Highlights H1 2021
− 6 benchmark bonds (plus 7 taps) issued in EUR and USD accounting for EUR 32.8bn raised. − 14 (plus 8 taps) “Green Bonds – Made by KfW” with issuances in EUR, GBP, AUD, NOK, CAD, CNY, HKD, MXN, PLN, SEK and ZAR accounting for EUR 7.6bn raised − Ongoing strong demand for large and liquid benchmark bonds: 65% of total funding volume in H1 2021. − EUR remains by far #1 funding currency. In H1 2021, EUR funding amounted to EUR 26.6bn making up 53% of KfW’s funding volume. − Although a challenging market environment, KfW continuously issued in a variety of currencies. Very strong demand in tailor-made placements especially in ZAR, HKD and CNY. − New reference rates: First SOFR-linked and first SONIA-linked transactions in H1 2021. First €STR-linked FRN already back in 2019.
KfW Bonds - Rely on the safe haven / September 2021 26 KfW’s global investor base Distribution of KfW’s EUR-Benchmark investor base € Geographic Distribution Investor Distribution in % in %
70 70 Europe ex Germany 60 60
50 50
40 40
Central Banks 30 30 Asset Mgt.
Banks 20 20 Germany Asia 10 10 Other Other Ins. & Pension 0 0 2016 2017 2018 2019 2020 Jan - Aug 2016 2017 2018 2019 2020 Jan - Aug 2021 2021 Central Banks Banks Asset Mgt. Europe ex Germany Germany Asia Other Ins. & Pension Other
Based on allocations
KfW Bonds - Rely on the safe haven / September 2021 27 KfW’s global investor base Distribution of KfW’s USD-Benchmark investor base $ Geographic Distribution Investor Distribution in % in %
60 60
50 50
Central Banks* 40 40 Americas Banks Europe 30 30
20 20 Asia Asset Mgt.
10 10 Other Other
0 MEA 0 2016 2017 2018 2019 2020 Jan - Aug 2016 2017 2018 2019 2020 Jan - Aug 2021 2021 Asia MEA Europe Americas Other Central Banks Banks Asset Mgt. Other
* The category „Central Banks“ includes also Official Institutions since April 2019 Based on allocations
KfW Bonds - Rely on the safe haven / September 2021 28 KfW’s Benchmark-Programmes in EUR and USD Outstanding bonds and notes Amount 7,000 Outstanding in EUR m 6,000 5,000 4,000 3,000 2,000 1,000 € 0
Amount outstanding Issued in 2021
6,000 Amount outstanding 5,000 in USD m 4,000 3,000 2,000 $ 1,000 0
Amount outstanding Issued in 2021
KfW Bonds - Rely on the safe haven / September 2021 29 KfW EUR-Benchmark-Programme Highlights H1 2021 € − Established in 2001, KfW’s EUR benchmark programme is the backbone of KfW’s funding strategy. Including H1 2021, KfW issued a total of 97 EUR benchmark bonds with an issuance volume of more than EUR 460bn. In H1 2021, KfW placed 3 new euro-denominated benchmark bonds with investors totaling EUR 13bn notional. − KfW is strongly committed to liquidity and regular issuance across all benchmark maturities each year. In the first 6 months of 2021, KfW launched one outing in 5y, one in 10y and an inaugural 15y issuance. We closely monitor secondary market liquidity. − KfW’s EUR benchmark programme has become a true “benchmark” in the market for many other issuers as well. − All new lines achieved a strong and oversubscribed order book, priced at the tighter end of guidance and showed good performance in secondary markets. − EUR benchmark funding amounted to EUR 20.4bn (net proceeds) making up 40% of KfW’s funding volume in H1 2021.
Notional amount bn EUR Settlement Tenor in yrs Coupon in % Lead Managers KfW-EUR-Benchmark I/2021 5.0 Jan 05, 2021 10 0.00 BofA Securities, Deutsche Bank, HSBC, J.P. Morgan KfW-EUR-Benchmark II/2021 5.0 Mar 02, 2021 5 0.00 Barclays, BNP Paribas, Commerzbank, Goldman Sachs KfW-EUR-Benchmark III/2021 3.0 May 12, 2021 15 0.375 BofA Securities, CACIB, LBBW, Morgan Stanley 7 Re-openings 7.0 various various various 20.0 0,000 0,000 0,000
KfW Bonds - Rely on the safe haven / September 2021 30 KfW USD-Global-Programme Highlights H1 2021 $ − Established in 2002, KfW’s USD Global Programme strategically complements KfW benchmark programmes. Until now, KfW has issued over 95 USD global bonds with an issuance volume of more than USD 390bn. − KfW is strongly committed to liquidity and regular issuance across all benchmark maturities. KfW closely monitors secondary market liquidity. − KfW’s USD Global programme has become a true “benchmark” in the market for many other issuers as well. − In H1 2021, KfW has issued three global benchmark bonds amounting to USD 15bn. This is especially remarkable in an environment with very competitive funding levels in the EUR market. − In H1 2021, all new lines were oversubscribed with excellent investor diversification, priced at the tighter end of guidance and showed good performance in secondary markets.
Notional amount bn USD Settlement Tenor in yrs Coupon in % Lead Managers KfW-USD-Benchmark I/2021 5.0 Jan 12, 2021 5 0.625 BMO, Citi, Morgan Stanley KfW-USD-Benchmark II/2021 5.0 Feb 24, 2021 3 0.250 Deutsche Bank, RBC Capital Markets, TD Securities KfW-USD-Benchmark III/2021 5.0 Apr 08, 2021 2 0.250 Barclays, Citi, TD Securities 15.0 0,000 0,000 0,000
KfW Bonds - Rely on the safe haven / September 2021 31 The liquidity of KfW’s benchmark bonds Characteristics, HQLA assessment & turnover statistics
Characteristics that support the liquidity in KfW Turnover in KfW benchmark bonds in secondary markets: benchmark bonds:
− Public sector entity in the EU Total turnover in KfW benchmark bonds is shown in relation to the − Risk weight: 0% according to CRR/Basel III total outstanding and the new issues of EUR and USD benchmark bonds of each funding year, respectively. − PSPP and PEPP eligibility: 33% limit PSPP only − Frequent issuer of benchmark bonds in core currencies EUR and USD EUR 172.5 Total 157.8 − Four lead managers for EUR benchmark bonds and three for the 144.0 147.0 Outstandings 97.0 USD Benchmark bonds (aggregate 138.5 116.4 principal) − Large-volume benchmark bonds 124.0 98.0 (sizes of 3 – 6 bn EUR/USD) 96.0 37.5 41.5 19 32.5 32.5 − Traded by approx. 30-40 banks OTC and at various stock New exchanges Issuance 2016 2017 2018 2019 2020 (aggregate − Broad order book diversification (Ø more than 100 investors) principal) USD Bonds and notes issued by KfW are in principle eligible 194.0 164.6 in the EU as level 1 assets pursuant to Article 10 para. 1 146.0 Total lit. (c)(v) of the Commission Delegated Regulation (EU) 138.0 Turnover* 2015/61 of October 10, 2014. 88.0 106.0 96.0 92.0 83.5 KfW’s bonds and notes have been assessed as "HQLA 53.7 34 25 21.5 23.4 US Eligible Assets" by Bloomberg, see Bloomberg, 14 KFW Corp
*No warranty is given as to the completeness or accuracy of the total turnover data which has been supplied by 15-20 different banks and accumulated but not verified by KfW.
KfW Bonds - Rely on the safe haven / September 2021 32 Green Bonds – Made by KfW Highlights of KfW’s footprint in the green bond market
Currency Split of all KfW Green Bonds issued by Dec 31, 2020
HKD, PLN High Quality Liquidity Credibility 3% NOK 3% AUD Aligned with GBP & Harmoni- Large sizes in benchmark Top ESG ratings and a strong 5% zed Framework for Reporting, maturities make KfW green focus on green finance make SEK SPO from CICERO, external bonds among the most liquid KfW one of the most credible 7% impact evaluation. green bonds in the market. issuers of green bonds. GBP
26% #1 in Germany Contribution to SDGs Green Indices €31bn of „Green Bonds – 7: Affordable & Clean Energy, Eligible for many green USD Made by KfW“ since 2014 11: Sustainable Cities & Com- indices like “The BofA Merrill make KfW one of the largest munities, 13: Climate Action. Lynch GB Index”, “Barclays issuers globally and by far the MSCI GB Index”, “S&P GB largest issuer in Germany. Index”, “Solactive GB Index”.
Green Bond Investor Thought Leader Global Engagement 56% Since 2015 runs a dedicated As member (since 2015) of Engaging in and suppoting of EUR green bond investment the Exec. Committee of the int‘l and national initiatives to portfolio of €2 - 2.5bn Green Bond Principles, KfW promote sustainability in mandated by the Federal is highly committed to foster capital markets (e.g. PRI, Ministry of Environment. green bond market standards. TCFD, EU TechExpert-Group).
KfW Bonds - Rely on the safe haven / September 2021 33 Green Bonds – Made by KfW Overview on issuances and reporting
8.1 8.3 EUR KfW Green Bonds issued by Aug 31, 2021: 8.1 USD EUR 39.1bn GBP ZAR EUR in CAD billions PLN HUF 3.7 3.7 NOK 2.7 2.8 HKD 1.6 SEK AUD CNY MXN
2014 2015 2016 2017 2018 2019 2020 Jan - Aug 2021
2 Green Bonds 5 Green 4 Green 7 Green 3 Green 9 Green 11 Green 14 Green issued Bonds issued Bonds issued Bonds issued Bonds & 1 Bonds & 1 Bonds +3 Bonds + Details promissory promissory Taps Taps note loan note loan issued issued
Allocation Available in Reporting Q1 2022
Impact Available in 2022 once impact is In 2024 Reporting externally evaluated
EUR equivalent; based on ECB reference rate on the pricing date; Reports available under: https://www.kfw.de/KfW-Konzern/Investor-Relations/KfW-Green-Bonds/KfW-Green-Bonds-Reporting/index-2.html
KfW Bonds - Rely on the safe haven / September 2021 34 How do “Green Bonds – Made by KfW“ work?
Liquidity management Renewable Energy & Energy Efficiency 2 Loan Programmes ~ 95,000 loans 2020
Socially Lender On-lending bank Final borrower responsible investors PLN 500m 2y Other renewables Various, totalling HKD 1.35bn Other OECD NOK 2bn 4y Solar & HUF 2bn countries 0.2% 7.1% USD2bn 10y 2.4% Wind Netherlands Funding EUR6bn 8y energy 2.7% France Other 13.8% 1.9% 20.0% 2.4% buildings
€8.35bn 0.5% €13.63bn 2020 2020
74.3% 93.1% Germany Residential 78.5% buildings
Green Bonds – Made by KfW Underlying assets
KfW Bonds - Rely on the safe haven / September 2021 35 A comparison of green and conventional KfW Bonds
Green Bonds – Made by KfW Conventional KfW Bonds
Issuer
Guarantor The Federal Republic of Germany
Rating (1) Moody‘s: Aaa Scope Ratings: AAA Standard & Poor‘s: AAA
Risk weight 0% according to CRR/Basel III
General business, however, amount General business Use of equal to net proceeds for climate friend- Proceeds ly projects accord. to KfW Framework
Reporting Allocation report & Impact report None
Target Institutional investors, especially green Institutional investors investors or socially responsible investors (SRI)
Currency Flexible, primarily EUR, USD, GBP, AUD, SEK, JPY. Up to 20 currencies possible.
Determined by underlying green assets, Flexible, primarily 2 to 15 year Term primarily 5 to 10 years
Repayment Bullet
(1) A rating is not a recommendation to buy, sell or hold securities. Ratings are subject to revision or withdrawal at any time by the assigning rating organization. Each rating should be evaluated independently of any other rating.
KfW Bonds - Rely on the safe haven / September 2021 36 Additional public transactions Diversification of investor base
Issues outside Benchmark-Programmes EUR Non-benchmark maturities USD Bullet, Callables, FRN (€-STR, Euribor)
AUD CHF CNY DKK Complementary currencies to cover different capital markets GBP Complete yield curve with the aim to enhance liquidity through taps HUF JPY Expand the programme to new currencies/markets MXN NOK Institutional and retail as well as local investor base NZD PLN SEK SGD ZAR …
KfW Bonds - Rely on the safe haven / September 2021 37 KfW in GBP KfW is one of the leading SSA issuers in the Sterling market
Amount outstanding in £ GBP million KfW’s GBP curve across the maturity spectrum (only fixed rate lines outstanding) 4,000 3,035 2,500 3,000 2,250 2,250 2,050 1,850 1,550 2,000 1,300 1,500 1,150 1,000 750 750 700 1,000 200 100 300 0
Amount outstanding Issued in 2021 Green Bond Green Bond 2021 Characteristics Highlights
− 17 fixed rate lines outstanding over the entire curve up to 2037. − GBP remains the 3rd most important currency after EUR and USD in KfW − Fixed rate issuance is complemented by lightly structured currency mix in 2020 transactions (primarily Step-ups, Callables, FRNs). − In 2020, 1 new bond line (with maturity in 2024) was added to the curve − Listing Luxembourg possible. − KfW GBP 650m 7-year Green Bond due 2026 was the largest and longest SSA Green Bond transaction at that time. − Our £1.50bn 2024 bond issued in January 2020 was the largest ever SSA £ issuance at that time and it has been tapped throughout the year.
KfW Bonds - Rely on the safe haven / September 2021 38 KfW in AUD KfW is among the largest SSA Kangaroo issuers A$ Amount KfW’s AUD curve across the maturity spectrum outstanding in (fixed rate lines outstanding) AUD million 3,000 2,650 2,750 2,700 1,950 2,000 1,650 1,550 1,050 1,000 300
0
Amount outstanding Issued in 2021 Green Bond Green Bond 2021
Characteristics Highlights
− KfW maintains its strategic approach to the Kangaroo market and − In 9 month of 2020, AUD 1.3bn were issued vs a total of AUD is a regular issuer. 2.6bn in 2019 and AUD 1bn in 2018 − With 12 fixed rate lines outstanding, KfW offers a very wide range − KfW has been and also this year, is a constant provider of liquidity of maturities in the Kangaroo market. via taps across the curve. − KfW is the largest Kangaroo SSA issuer in terms of newly issued bonds and outstanding volume (AUD 19.5bn). − KfW Kangaroo bonds are RBA repo eligible.
KfW Bonds - Rely on the safe haven / September 2021 39 KfW in NOK A strong addition to KfW’s funding programme NOK Amount outstanding in KfW’s NOK curve across the maturity spectrum NOK million
20,000 18,000 18,000 14,500 16,000 14,000 12,000 10,000 6,500 8,000 4,250 6,000 4,000 3,000 1,500 4,000 1,000 900 750 500 1,100 400 2,000 200 250 0
Amount outstanding Issued in 2021 Green Bond Green Bond 2021 FRN
Characteristics Highlights
− KfW is one of the largest issuer − In 2019 five new lines have been added including the inaugural − Offering one of the most liquid bonds KfW NOK4bn Green Bond due in August 2023. − Flexibility in deal/tap size. − In 2020 funding in NOK has slowed down leading to several TAPs − Listing Luxembourg. in 1y, 2y, and 4y maturity
KfW Bonds - Rely on the safe haven / September 2021 40 KfW in SEK Expanding green activities into Nordic region SEK Amount KfW’s SEK curve across the maturity spectrum outstanding in SEK million 12,000 10,000 10,000 7,000 8,000 5,000 6,000 4,000 2,350 2,000 2,000 1,000 1,000 2,000 0
Amount outstanding Issued in 2021 Green Bond Green Bond 2021
Characteristics Highlights
− KfW is one of the largest issuer − KfW evolved its SEK funding activities further into Green Bonds – − Offering one of the most liquid bonds Made by KfW in public format and issued further private − Flexibility in deal/tap size. placements. − Listing Luxembourg. − The SEK 7bn green bond with a maturity of 3 years was the fifth "Green Bond - Made by KfW" denominated in SEK since 2015. With its SEK 7bn green bond with a maturity of 3 years KfW expanded its SEK Green Bond curve, it was the largest ever issued SEK green bond.
KfW Bonds - Rely on the safe haven / September 2021 41 KfW in JPY
Uridashi Award - Deal of the Year ¥ Public Issues
Outstanding: − Global JPY 125bn 2.05%, due February 2026 − Global JPY 50bn 2.60%, due June 2037
Japanese retail (Uridashi) Private placements (MTNs) Predominantly structured JPY Mostly structured issues, Nikkei-linked and PRDCs (Nikkei-Linked, Eurostoxx-Linked and Dual Currency) are predominant; Minimum issue size JPY 100m
› EUR 219m equivalent raised 2021 › No issuance via 2 transactions › EUR 327m equivalent raised 2020 › No issuance via 10 transactions › EUR 350m equivalent raised 2019 › JPY 800m raised via 4 trades via 9 transactions › EUR 1.471bn equivalent raised 2018 › JPY 1 bn raised via 4 trades via 28 transactions › EUR 1.796bn equivalent raised 2017 › No issuance via 24 transactions
KfW Bonds - Rely on the safe haven / September 2021 42 KfW in CNH (Offshore CNY) KfW’s long-term goal is to enter the Panda bond market CN¥
KfW is convinced of the increasing global importance of the Chinese Renminbi. Since 2012 KfW has established itself in the CNY Offshore market and has issued a total amount of more than CNY 20bn with maturities up to 5 years. In the first half of 2021, KfW launched 12 CNY trades (including 2 taps) with maturity of 1-5 years, three of them in green format, one of that a syndicated benchmark style transaction which has been tapped once (Outstanding: CNY 1.75bn, 3yrs), and continues to be one of the leading SSA issuers in the CNY Offshore market.
Issuance volume Total trades in CNY million 17 7,000 2019: 18 2012: KfW issued an all-time 16 6,000 KfW’s inaugural high funding volume of Offshore CNY bond CNY 6.4bn, making it 14 5,000 12 the largest SSA issuer 12 2014: in CNY. 10 4,000 First KfW CNY 10 bond ever listed 8 3,000 in Frankfurt 6 6 2,000 4 4 2 2 2 2 1,000 1 2 0 - 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021ytd Volumen in Mio. CNH Number of Trades
KfW Bonds - Rely on the safe haven / September 2021
43 Tailor-made placements Current product development
Customized products for investor needs
Targets Flexible approach Broad investor diversification in various Currencies Jan - Jun 2021 currencies and structures
EUR 3.2bn 6%3% 7% th Key figures as of 30 83 transactions June 2021 9% 47% 7 currencies EUR 3.2bn 7%
KfW satisfies current investor’s requirements: 21% Demand for CNY, HKD and ZAR bonds remains on a high level. EUR ZAR CNY HKD Current product Strong increase of number in total inquiries JPY AUD GBP development KfW satisfies investors’ preferences for yield enhancing products in combination with an AAA credit quality
KfW Bonds - Rely on the safe haven / September 2021 44 Tailor-made placements (2)
Characteristics Highlights
Highly diversified: Minimum size: − Step-up callables − EUR, USD 10m − Range accruals − USMTN 5m − Zeros − JPY 100m (MTN) − CMS-linked structures − JPY 1bn (Uridashi) − FX-linked structures Minimum non call 6 months, multi-callable KfW offers − etc. structures can be quarterly callable for tailor-made − 50m (EMTN) Redemption profile: structures to − 10m (US-MTN) − Bullet investors − Callable Minimum non call 3 months and quarterly − TARN callable for − Trigger − JPY-MTN and Uridashi
Method of distribution: − Underwriting
KfW Bonds - Rely on the safe haven / September 2021 45 “Namensschuldverschreibungen”
Issuance volume1 (in EUR million) Jun-21 266 Due to increased investor demand, KfW 2020 495 offers "Namensschuldverschreibungen" since 2019 82 August 2009 2018 276 2017 414 H1/2021: Strong competition like last year 2016 755 2015 183 with almost 11 transactions. 2014 335 2013 800 2012 190 "Schuldscheindarlehen" remain available 2011 1900 0 500 1000 1500 2000
Characteristics
− Investor base: German insurances and pension funds − Product variations: fixed rate with step-up and zero structures with optional issuer call options as well as double-/triple-or-quit structures − Stand-alone KfW documentation − Assignments possible of EUR 1m − Minimum issuance volume of EUR 10m
1 Issuance volume comprises “Namensschuldverschreibungen“ and “Schuldscheindarlehen“
KfW Bonds - Rely on the safe haven / September 2021 46 Money market Large ECP / USCP programmes for short term liquidity
ECP programme USCP programme Variety of currencies Outstanding Volume as of 31 Dec 2020 Multi-currency commercial USD CP programme has an In 2020 KfW has issued CPs paper (ECP) programme with increased size of in 7 currencies under its its programme size of ECP programme: EUR-CP EUR 33,035m USD 20bn. US-CP USD 10,099m EUR 70bn AUD, CHF, EUR, GBP, NZD, Doubled in 2020, the pro- PLN, USD is KfW’s most important gramme offers US-investors Targets: Overall, CPs were issued in source of short-term funding. short-term KfW papers and, 16 currencies since the in turn, provides KfW with EUR +/- EUR 35,000m launch of the programme. same-day USD liquidity. USD +/- USD 7,500m Sizes start from EUR 2.5m and are not capped. Sizes are feasible between USD 0.25m and USD 1bn. Tailor-made solutions Top short-term We aim to meet our Ratings investors’ needs by showing P-1 (Moody’s) In 2020, we issued: In 2020, we issued: flexibility in sizes, maturities, S-1+ (Scope) and currencies A-1+ (S&P) (wide currency range pos- 654 ECPs with a 573 USCPs with a sible in ECP programme). total volume of total volume of Target maturity <1 year. EUR 95.5bn. USD 105bn.
.
KfW Bonds - Rely on the safe haven / September 2021 47 KfW in the capital markets in 2021
Strong presence in the capital markets with funding target of EUR 75 to 80 billion.
KfW’s outstanding access to the capital markets, including in USD, facilitates the issue of liquid global bonds. KfW relies on its proven strategy of diversification and therefore continues to offer a wide selection of products addressing investors’ needs.
EUR & USD remain key currencies in 2021 (2020: 88%).
The KfW Benchmark Programs remain the most important funding source.
GBP, AUD and Scandinavian currencies are important for KfW’s funding mix.
Strong commitment to green bonds, target: up to EUR 10 billion.
KfW Bonds - Rely on the safe haven / September 2021 48 Photo credits / references
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KfW Bonds - Rely on the safe haven / September 2021 49 Contacts
Treasurer of KfW: Ext. KfW Bankengruppe Tim Armbruster - 5599 Palmengartenstrasse 5–9 60325 Frankfurt am Main Treasury: Markus Schmidtchen - 4783 Phone +49 69 7431 - Ext. Fax +49 69 7431 - 3986 Capital Markets: Petra Wehlert - 4650 [email protected] Otto Weyhausen-Brinkmann - 4652 Alexander Liebethal - 4656 Bloomberg: KfW
Investor Relations: www.kfw.de/investor-relations Jürgen Köstner - 3536
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KfW Bonds - Rely on the safe haven / September 2021 50 Notes
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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 documentKfWyou Bondsacknowledge - Relyacceptance on the safeof haventhese terms / September. 2021 52