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Money KfW has to borrow less money on the capital market

14:00  02 july  2020
14:00  02 july  2020 Source:   de.reuters.com

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A global capital market benefits borrowers by lowering the cost of capital and. "patient money ". Harvard economist Martin Feldstein has argued that most of the capital that moves internationally is Problems of limited liquidity are not restricted to less developed nations, which naturally tend to have

1) Compared to money market securities, capital market securities have A) more liquidity. (II) Capital markets provide an alternative to investment in assets such as real estate and gold.

The logo of KfW Bank is pictured at the bank's headquarters in Frankfurt © Reuters / RALPH ORLOWSKI The logo of KfW Bank is pictured at the bank's headquarters in Frankfurt

Frankfurt (Reuters) - The governmental development bank KfW has to borrow less money on the capital market despite the multi-billion dollar Corona aid programs because she shot herself other sources of funding.

The volume of the planned bond issues was reduced by ten billion to 65 billion euros, said KfW on Thursday. The state bank used alternatives: For example, at the end of June it obtained 13.4 billion euros from an injection of money launched by the European Central Bank (ECB) - in technical jargon TLTRO III. With this, the ECB pumps up the banks with liquidity so that they can continue to lend to companies and households even in times of crisis.

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Less capital creates a tighter budget and now the deleverage. Deleveraging is seen by depositors and then they withdraw their money out, which leads Why might a bank be willing to borrow funds from other banks ata higher rate than it can borrow from the Fed? Creditability- loan from another bank

The money market is an organized exchange market where participants can lend and borrow short-term, high-quality debt securities with average maturities of one year or less . The capital market benchmarks its interest rates based on the prevailing interest rate in the money market .

In addition, KfW can draw a maximum of 100 billion euros from the federal economic stabilization fund (WSF) launched in the corona crisis. It plans to use 30 billion of this in the current quarter.

COMPANIES APPLY FOR CORONA AID OVER 50 BILLION EUROS

The state development bank has so far raised 36 billion euros in 14 currencies on the capital markets this year. With the upcoming bond placements of around 30 billion euros, KfW plans to step up its issuing activities on the dollar market again.

To date, companies have applied for almost 50 billion euros in loans from KfW as part of the KfW Corona Aid Program, almost 69,300 applications have been received. The initially high demand for aid has waned in recent weeks. For the majority of the loans available since the end of March, the state assumes up to 90 percent of the default risk, the rest must be borne by the borrower's house banks.


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