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22 Dec 2015
Liquidity strains or New Year gains? - Rabobank
FXStreet (Delhi) – Research Team at Rabobank, suggests that with many issuers yet to finalise official funding targets for 2016 (including the European Investment Bank) KfW has formally announced its plans for the year ahead.
Key Quotes
“The German development bank is looking to raise EUR 70-75bn in the coming year following ca. EUR62bn in total funding in 2015. Of particular note, KfW’s funding volume in USD (45% of total) exceeded the share of funding in EUR (38%) for the first time as the issuer took considerable advantage of more favourable dollar funding conditions in Q1.
• Having issued EUR 3.7bn worth of green bonds in 2015, KfW plans to continue developing this programme next year via its “Green Bonds – Made by KfW”. KfW has already invested around EUR 280mn in its green bond portfolio which was launched in April 2015. Further investments of ca. EUR 300mn are planned for 2016.
• KfW invested around EUR 840mn in securitisation transactions in 2015 as part of the issuer’s efforts to promote and diversify SME financing via the capital market. Of this amount around EUR 190mn was invested in European SME securitisation transactions. For 2016, KfW has planned a “commitment volume” of EUR 1bn, half of which is to be spent on SME financing in Germany and Europe respectively.
Traders’ view
• The lack of liquidity continues to impact negatively on credits. The preponderance of sellers is leading to wider spreads at a time when every other factor is suggesting they should be contracting.
• There are still investors and other participants intent on reducing wherever possible and they are prepared to do so at discounted levels purely to get done. This skew is naturally putting pressure on spreads but it is not a true reflection of sentiment and the very strong likelihood is that in just over 2 weeks those issues being readily disposed of will have regained their appeal and will once again be highly sought-after.”
Key Quotes
“The German development bank is looking to raise EUR 70-75bn in the coming year following ca. EUR62bn in total funding in 2015. Of particular note, KfW’s funding volume in USD (45% of total) exceeded the share of funding in EUR (38%) for the first time as the issuer took considerable advantage of more favourable dollar funding conditions in Q1.
• Having issued EUR 3.7bn worth of green bonds in 2015, KfW plans to continue developing this programme next year via its “Green Bonds – Made by KfW”. KfW has already invested around EUR 280mn in its green bond portfolio which was launched in April 2015. Further investments of ca. EUR 300mn are planned for 2016.
• KfW invested around EUR 840mn in securitisation transactions in 2015 as part of the issuer’s efforts to promote and diversify SME financing via the capital market. Of this amount around EUR 190mn was invested in European SME securitisation transactions. For 2016, KfW has planned a “commitment volume” of EUR 1bn, half of which is to be spent on SME financing in Germany and Europe respectively.
Traders’ view
• The lack of liquidity continues to impact negatively on credits. The preponderance of sellers is leading to wider spreads at a time when every other factor is suggesting they should be contracting.
• There are still investors and other participants intent on reducing wherever possible and they are prepared to do so at discounted levels purely to get done. This skew is naturally putting pressure on spreads but it is not a true reflection of sentiment and the very strong likelihood is that in just over 2 weeks those issues being readily disposed of will have regained their appeal and will once again be highly sought-after.”