German Development Bank KfW to Raise €10 Billion Through Green Bonds in 2022

KfW plans to raise €80 billion to €85 billion in 2022

December 23, 2021


German development bank Kreditanstalt für Wiederaufbau (KfW) plans to raise €80 billion (~$90.35 billion) to €85 billion (~$96 billion) of funding in 2022, which will include at least €10 billion (~$11.3 billion) of green bond issuance.

Most of this funding will be euro and US dollar benchmark bonds, achieving volumes of €3 billion (~$3.4 billion) to €5 billion (~$5.65 billion) at the initial issue.

The liquidity of bonds is also a key concern of investors, which KfW intends to address in the best possible way in 2022. The bank, therefore, plans to increase selected outstanding Euro Benchmark Bonds up to a volume of €7 billion (~$7.91 billion).

From January 1, 2022, KfW will replace the energy-efficient construction promotional program that expired in the summer of 2021 with the Federal Funding for Efficient Buildings (BEG) program. KfW will include the promotional programs for Sustainable Mobility in the framework. The updated Green Bond Framework is aligned with the ICMA Green Bond Principles published in June 2021.

KfW has raised the equivalent of €16 billion (~$18.07 billion) through 37 green transactions in 13 different currencies in 2021. The high green bond volume in 2021 was due to solid demand, especially for the loan program ‘Energy-efficient construction,’ along with consistent investor demand.

Funding Volume

KfW said it is the second-largest issuer of the green bond after France.

As of December 15, 2021, KfW conducted its refinancing via green and conventional bond issues on the capital markets with a record volume of €82 billion (~$92.61 billion).

Until mid-December, KfW has issued 211 bonds in 15 different currencies in international capital markets, with 21 benchmark transactions in euros and US dollars for the equivalent of almost €50 billion (~$56.47 billion) representing 61% of the funding volume.

This year KfW also successfully expanded its presence in the US dollar market and issued the largest US dollar green bond in the green bond market worldwide.

In October, the European Union issued its first-ever NextGenerationEU green bond. The 15-year bond due on February 4, 2037, was 11 times oversubscribed, with books exceeding €135 billion (~$142.20 billion). The funds from the green bond issue will be used to finance green and sustainable expenditure under the recovery and resilience facility.

Recently, the Maharashtra state cabinet approved a loan of ₹15.64 billion (~$212.2 million) at an annual interest rate of 0.05% from KfW for 390 MW solar projects.