Please see the last page of this publication for important disclosures.

May 1 2009
Agency/FDIC Guaranteed Debt Strategy

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Investor All American Fixed-
Income poll, and
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to be worthwhile.
Supranationals
Guide to the Largest USD Issuers
Supranational organizations generally focus on economic growth
especially in less developed areas, environmental projects, renewable
energy and social goals within a targeted region. Supranational bonds
are debt obligations backed by these organizations, which were
formed and are usually owned collectively by sovereigns. Dollar-
denominated supranational issuance has been increasing in 2009 as
many of these banks have an expanded role supporting economic
recovery and social goals. At the same time, spreads in the sector are
poised to narrow as non-government markets re-open, helping to offset
the crowding out effect from government guaranteed issuance that first
pressured spreads in the fourth quarter of last year.
The following article summarizes the largest USD supranational issuers
including World Bank, Inter-American Development Bank, International
Finance Corporation, KfW, and the European Investment Bank. As
seen below, all of the issuers are AAA-rated, 0% risk weighted and fall
into the Barclay’s Government-Related Index as supranationals.

Supranational Comparison
If you have not received a Total Debt $ Debt Projected
Issued Issued 2009 Debt Risk Wt
ballot and would like to vote, $/€ bn Rating Ow ners Guarantee Structure 2008 2008 Issuance Outstanding (BIS)

please send a request to Washington, DC Based Issuers

None, but strong implicit
FIRTSurvey@iimagazine.com, 185 member support from its ow ners
Aaa/AAA/ countries. US is (multilateral development
including your name, title, IBRD AAA largest at 16.4%. bank). $19.0 $6.2 $30-$35 $87.7 0%
name of your firm and total 47 Member countries.
US is the largest,
None, but strong implicit
support from its ow ners
fixed income assets under Aaa/AAA/ holding 30% of (multilateral development
IADB AAA capital. bank). $11.1 $7.4 $15-$20 $49.4 0%
management. 179 Member None, but strong implicit
countries. US is support from its ow ners

9
Aaa/AAA/ largest, holding (multilateral development
Margaret Kerins & Team IFC NR 24.1% of the capital bank). $6.3 $2.0 $8.0 $21.3 0%
European Based Issuers
None, but strong implicit
Federal Agency Debt support from its ow ners
Aaa/AAA/ (multilateral development
EIB AAA 27 EU Member States bank). € 59.5 $35.5 € 70.0 € 254.2 0%
Margaret Kerins, CFA 80% German Federal
Aaa/AAA/ Gov't, 20% German Guarantee from German
Managing Director / Agency Strategy KfW AAA States Gov't € 75.3 $35.6 € 75.0 € 347.5 0%
Source: IBRD, IADB, IFC, EIB, KfW, RBS, Note: KfW and IFC as of 12/31/08, IBRD and IADB as of 6/30/08, EIB as of 12/31/07, Bank
(800) 426 4443 for International Settlement assigns a 0% risk w eight to claims on multilateral developments banks under Basel II Framew ork.
Please contact your appropriate regulator for further guidance.
Margaret.Kerins@rbs.com
Spread Comparison: Historically, the largest supranational issuers
Ryan Graf traded flat to rich to US agencies, with the differential increasing in
2008 due to the GSE’s housing exposure. This relationship reversed
Agency Strategy
when Fed intervention drove US agency spreads tighter than
(800) 426 4443 supranational spreads. Recently, foreign banks have been able to
Ryan.Graf@rbs.com issue senior unsecured debt and covered bonds. As these markets re-
open, supply pressure should ease, narrowing supranational spreads.
This trend is already underway as seen below.
www.rbsm.com/strategy
 The Royal Bank of Scotland

]
Supra Spread Performance vs. Tsy
250

Agency/FDIC Guaranteed Debt Strategy | May 1 2009

Crowding out Effect
200 US Agy Traded at Wider Fed Purchase Plan
S S

Spread (bp)
150
100
50
0

May-08

Jul-08

Dec-08
Jun-08

Aug-08

Feb-09
Sep-08

Oct-08

Nov-08

Jan-09

Mar-09

Apr-09
IADB 4.375 9/12 EIB 4.625 3/12 KfW 4.75 5/12
FNMA 4.875 5/12 IBRD 7.125 6/10
Source: RBS

International Bank for Reconstruction

and Development (IBRD)
IB R D S p re a d s vs . T s y What is IBRD? The International Bank for Reconstruction and
200 Development (IBRD), also known as the World Bank, was founded in
S p re a d (b p )

150 1944 and is the principle member of the five institutions that comprise
100 the World Bank Group.1 The World Bank is headquartered in
50 Washington DC, is SEC exempt, and provides medium- and long-term
0 financing to governments and government-guaranteed projects in
Ma y Jun A ug O ct D e c F e b A pr developing countries. World Bank focuses on fighting poverty and
08 08 08 08 08 09 09
hunger, education, gender equality, child mortality, maternal health,
7 .1 2 5 % 2 0 1 0 7 .6 2 5 % 2 0 2 3
disease, and the environment.2
S o u rc e : R B S , IB R D

Who owns IBRD? World Bank is owned by its 185 member countries.
The five largest shareholders include the United States (16.4% of total
subscribed capital), Japan (7.9%), Germany (4.5%), France (4.3%),
and the United Kingdom (4.3%).

Guarantee: Individual debt instruments issued by the World Bank are

not direct obligations of any government, but the debt is collectively
backed by its member’s capital commitments.

Capital: At the end of FY2008 (6/30/08), World Bank had $189.8 bn in

subscribed capital comprised of $11.5 bn in paid in capital and $178.3
bn in callable capital, which can only be called from shareholders in
order to satisfy debt holder claims. World Bank has never made a
capital call. At 6/30/08, shareholder’s equity totaled $41.5 bn.

Rating: Moody’s/S&P/Fitch: Aaa/AAA/AAA

S&P’s bases its stable outlook and triple-A rating on World Bank’s
‘‘very strong capital position’’ which includes $79.3 bn in callable
capital from countries S&P rates ‘AAA’, loan and guarantee portfolios

1 The World Bank Group includes the International Bank for Reconstruction and Development (IBRD), the International Finance
Corporation (IFC) the International Development Association (IDA), the Multilateral Investment Guarantee Agency (MIGA), and the
International Centre for Settlement of Investment Disputes (ICSID)
2 World Bank: 2008 Annual Report
http://web.worldbank.org/WBSITE/EXTERNAL/EXTABOUTUS/EXTANNREP/0,,menuPK:1397243~pagePK:64168427~piPK:641684
35~theSitePK:1397226,00.html

2
 The Royal Bank of Scotland

which have performed very well historically with credit risk declining
each year since 2003, and adequate liquidity.3

Agency/FDIC Guaranteed Debt Strategy | May 1 2009

IB R D C a p ita l M a rk e t F u n d in g 2 0 0 8 Debt Outstanding and Issuance: World Bank issues discount notes,
4%
6% benchmark bonds, including large globals, and structured notes,
which include callables.
7% 32%
o At the end of FY2008 (6/30/08), World Bank had $87.7 bn in
debt outstanding.
14%
o In FY2008, World Bank issued $19 bn in 19 different currencies
as seen to the right. About $6.2 bn of this issuance was
3%
denominated in USD.
4%
4% 13% o World Bank expects to issue $30 to $35 bn in 2009.
5% 8%
USD ZAR AUD CAD E UR GBP
IS K JP Y NZD TR Y O th e rs
S o u rc e : R B S , IB R D

IB R D G ro s s Is s u a n c e b y Y e a r

40
35
35
30
25
U S D bn

19 19
20
15 12 13
10 11
10
5
0
2003 2004 2005 2006 2007 2008 2009 E st
S o u rc e : R B S , IB R D

IB R D U S D L a rg e R e c e n t B o n d s
7 40

P ric in g S p rd v s . M id S w a p s
6 30
5 20
10
4
0
$ B illio n

3
-1 0
2 -2 0
1 -3 0
0 -4 0
5 yr 1 yr F lt 1 yr M T N 1 .1 6 yr 2 yr 3 yr 2 yr C a ll

O c t-0 8 J a n -0 9 F e b -0 9 F e b -0 9 M a r-0 9 A p r-0 9 A p r-0 9

S o u rc e : R B S , IA D B

3 S&P 3/18/09 Rating’s Report on IBRD

3
The Royal Bank of Scotland

IBRD Distribution: The investor base for the three most recent USD
global deals issued by World Bank was dominated by Central Banks
while the geographic distribution was dominated by Asia as seen

Agency/FDIC Guaranteed Debt Strategy | May 1 2009

below.

IB R D R e c e n t U S D Is s u a n c e D is trib u tio n b y In v e s to r T yp e
3%
15%

58%
24%

C e n tra l B a n k s B a n k s /C o rp s F u n d M a n a g e rs P e n s io n /In s u ra n c e
S o u rc e : R B S , IB R D

IB R D R e c e n t U S D Is s u a n c e D is trib u tio n b y R e g io n
11%

17%

51%

21%

A s ia A m e ric a s E u ro p e M id E a s t & A fric a

S o u rc e : R B S , IB R D

4
 The Royal Bank of Scotland

Inter-American Development Bank (IADB)

What is IADB? IADB was founded in 1959 and is the main source of

Agency/FDIC Guaranteed Debt Strategy | May 1 2009

IA D B S p re a d s vs . T s y
200 multilateral financing for development projects in 26 countries in Latin
America and the Caribbean. IADB’s five priorities include reducing
S p re a d (b p )

150
poverty, promoting sustainable energy, water and infrastructure
100
projects, promoting education and innovation and creating economic
50
opportunities for Latin America and the Caribbean. The bank provides
0 financing to private enterprises and regional and local governments for
Ma y Jun A ug O ct D e c F e b A pr projects working towards economic and social development in low-
08 08 08 08 08 09 09
income regions. For example, in 2008, $3.9 bn financed projects to
5% 2011 3 .5 % 2 0 1 3
reduce poverty and enhance social equity, representing 34% of the
S o u rc e : R B S , IA D B $11.2 billion in approved loans. IADB is SEC exempt and is
headquartered in Washington, DC.

Who owns IADB? The Bank is owned by its 48 member countries with
the borrowing countries holding about 50% of the shares. The U.S. is
the largest holder of capital at 30% followed by Argentina (10.8%),
Brazil (10.8%), Mexico (6.9%) and Venezuela (5.8%).

Guarantee: IADB’s debt instruments are not direct obligations of any of

the member countries, but are collectively backed by the member
countries capital commitments.

Capital: At the end of FY2008 (6/30/08), IADB had $100.9 bn in

subscribed capital of which $4.3 bn was paid-in capital. The
remaining $96.6 bn is callable in the event that the IADB needs the
funds to meet its debt obligations. In addition to paid-in capital, the
bank has $15.1 bn in retained earnings and AOCI bringing total equity
to $19.4 bn.

Rating: Moody’s/S&P/Fitch: Aaa/AAA/AAA

According to S&P, IADB’s stable outlook and triple-A rating is based on

its strong financial profile which includes $41 bn in callable capital from
‘AAA’ rated countries, on the excellent historical performance of its
sovereign and sovereign-guaranteed loan portfolio, and on its “robust”
capitalization and liquidity ratios.4

Debt Outstanding and Issuance: IADB primarily issues fixed rate debt
IADB Capital Market Funding 2008 (97% of 2008 issuance) which is typically swapped to floating rate
3%
10% debt. In addition, the bank issues discount notes to manage its short-
9%
term cash flow needs.
o At the end of FY2008 (6/30/08), IADB’s debt outstanding
11% totaled $49.4 bn compared with $45 bn at the end of FY2007.
67% o In FY2008, IADB issued $11.1 bn equivalent debt versus $6.1
bn in 2007.
USD AUD NZD ZAR Others o About 67% or $7.4 bn of FY2008 issuance was in USD as seen
Source: RBS, IABD
to the right. This included $3.75 bn in three benchmark deals
with 3yr, 5yr and 10yr maturities as seen below.
o IADB projects FY2009 issuance in the $15 to $20 bn range.

4 S&P 7/28/08 Ratings Report on IADB

5
The Royal Bank of Scotland

IA D B G ro s s Is s u a n c e b y C u rre n c y

Agency/FDIC Guaranteed Debt Strategy | May 1 2009

2 5 .0
20
2 0 .0

1 5 .0

U S D bn
1 1 .1
1 0 .0 9 .1
5 .4 6 .1
4 .7 4 .9
5 .0

0 .0
2003 2004 2005 2006 2007 2008 2009 E st
USD AUD NZD MX N CAD ZAR O th e rs
S o u rc e : R B S , IA D B

IA DB US D B o n d s Is s u e d in 2 0 0 8 & 2 0 0 9
3 .0 0 0 100

P ric in g S p rd v s . M id S w a p s
2 .5 0 0 80
60
2 .0 0 0
40
1 .5 0 0
$ B illio n

20
1 .0 0 0
0
0 .5 0 0 -2 0
0 .0 0 0 -4 0
5y r 10y r 3y r 2 y r F lt 5y r

Ma r-0 8 S e p -0 8 O c t-0 8 Ma r-0 9 A p r-0 9

So urce: RB S, IA DB

IADB Distribution: The investor base for the two most recent USD
deals issued by IADB was dominated by Central Banks with
widespread geographic distribution as seen below.

IADB Recent USD Distribution Region IADB Recent USD Distribution Investor Type

18% 5%

24%
47% 47%

35%
24%
Central Bks Banks/Corps
Asia Americas EMEA
Fund Mgrs Pension/Insur Source: RBS, IADB
Source: RBS, IADB

6
 The Royal Bank of Scotland

International Finance Corporation (IFC)

IF C S p re a d s vs . T s y

Agency/FDIC Guaranteed Debt Strategy | May 1 2009

250
What is IFC? IFC was established in 1956 to further economic
development in its member countries by making loans and equity
S p re a d (b p )

200
150 investments in private enterprise where sufficient private capital is not
100 available.5 IFC is a member of the World Bank Group whose activities
50 are coordinated with and complement the other World Bank Group
0 members. IFC is guided by five strategic pillars which include:
Ma y Jun A ug O ct D e c F e b A pr strengthening the focus on frontier markets, building partnerships with
08 08 08 08 08 09 09
emerging market players, ensuring environmental and social
5 .1 2 5 % 2 0 1 1 3 .5 % 2 0 1 3
S o u rc e : R B S , IF C
sustainability, promoting private sector growth, and developing local
financial markets. High profile projects include financing for a meat
processing company in Brazil and a pulp mill in Uruguay. IFC is also
helping private enterprises in emerging markets deal with the current
financial and economic crisis.

IFC is SEC exempt and is headquartered in Washington, DC. Despite

close ties to IBRD, IFC is legally and financially independent. At the
end of 2008, IFC’s assets totaled $47.4 bn and included net loans of
$14.9 bn, trading securities of $13.4 bn, equity securities of $4.8 bn
and debt securities of $1.4 bn. IFC’s liquid assets total $14.6 bn and
represent 30% of total assets.6

Who owns IFC? IFC is owned by its 181 member countries. The US is
the largest holder of capital at 24%. After the US, the five largest
shareholders are Japan (6%), France (5%), Germany (5%), the UK
(5%), and Canada (3%).

Guarantee: Like World Bank, IFC’s debt instruments are not direct
obligations of the member countries, but the debt is collectively
backed by the strength of its members.

Capital: At the end of the second quarter of FY2009 (12/31/08), IFC

had total equity of $15.75 bn comprised of $2.4 bn of subscribed
capital, retained earnings of $12.75 bn and AOCI of $655 mm. IFC’s
equity capital is fully paid-in and is exclusively in USD.

Rating: Moody’s/S&P/Fitch: Aaa/AAA/NR

According to S&P, IFC’s stable outlook and triple-A rating is based on

its strong shareholder support; strong capital position; well-diversified
loan, investment, and guarantee portfolio; and its high liquidity ratios.
The rating incorporates S&P’s expectations that IFC will have a high
variation in earnings due to its mandate and mark to market accounting
rules, but “that these variations can be accommodated by the
institution’s high level of capitalization and liquidity.” S&P does note
that IFC’s rating could come under pressure if its capitalization or
liquidity ratios were to decline materially due to protracted losses or if
shareholder support for its public policy objectives was to decline.7
IF C C a p ita l M a rk e t F u n d in g b y Debt Outstanding and Issuance: IFC borrows in a variety of currencies
C u rre n c y 2 0 0 8
based on loan activity and in order to promote the development of
5% 5% emerging capital markets. In general, IFC swaps its borrowings into
9% 31% floating rate USD debt.
9%
5 http://www.ifc.org/investors
10% 6 http://www.ifc.org/ifcext/treasury.nsf/AttachmentsByTitle/InvestorFactSheet-April2009/$FILE/Fact+Sheet_April+09.pdf

31% 7 S&P 2/13/09 Ratings Report on IFC

USD AUD NZD CAD
ZAR JP Y O th e r 7
S o u rc e : R B S , IF C
The Royal Bank of Scotland

o At the end of 2008, IFC’s debt outstanding totaled $21.3 bn

compared with $15.9 bn at the end of FY 2007.
o In FY08, IFC issued about $6 bn in debt securities, including

Agency/FDIC Guaranteed Debt Strategy | May 1 2009

31% or $1.9 bn in US dollars.
o Since 2000, IFC has issued a $1 bn global bond each year.
o Issuance for 2009 is projected to be about $8 bn.

IF C G ro s s Is s u a n c e b y C u rre n c y

9
8 8
7
6
6

U S D bn
5
4 3 .5
3 3
3 2 .8
2 1 .8
1
0
2003 2004 2005 2006 2007 2008 2009 E st
USD AUD NZD CAD ZAR JP Y O th e r
S o u rc e : R B S , IF C

IFC Distribution: Central Banks dominated IFC’s 2008 investor

distribution representing 64% while geographic distribution was
widespread as seen below.

IF C 2 0 0 8 G lo a b a l B o n d D is trib u tio n b y In v e s to r T yp e

10%
20%

6%

64%
F u n d M a n a g e rs C e n tra l B a n k s B a n k s /In s ./P e n . O th e r O ffic ia l In s t.
S o u rc e : R B S , IF C

IF C 2 0 0 8 G lo a b a l B o n d D is trib u tio n b y R e g io n

25%

40%

35%
A m e ric a s A s ia E u ro p e , M id d le E a s t, a n d O th e rs
S o u rc e : R B S , IF C

8
 The Royal Bank of Scotland

European Investment Bank (EIB)

EIB A verage Spreads vs. Tsy
What is EIB? EIB was created in 1958 as the long-term lending bank of

Agency/FDIC Guaranteed Debt Strategy | May 1 2009

175
150
the European Union (EU). EIB is a policy-driven, pubic bank that
125 finances capital projects in the areas of infrastructure, environment,
100 education, innovation, energy and support for small and medium sized
75
50 companies. EIB primarily works toward reducing economic disparities
25 within the EU and has increased lending in response to the financial
0
and economic crisis. In 2008, EIB increased loans to €57.6 bn from
M ay Jul Sep No v Dec M ar A pr
08 08 08 08 08 09 09 €47.8 bn in 2007.
2011-12 2013-15 2016-18

Source: RBS , EIB Who owns EIB? The bank is owned by the 27 EU member countries,
who have all subscribed to the bank’s capital. Germany, France, Italy,
EIB A verage Spreads vs. Swaps and the UK are the largest subscribers of capital with each owning
125 16.2%.
100
75
50 Guarantee: EIBs debt instruments are not direct obligations of the
25
0 member countries, but the debt is collectively supported by the
-25 strength of joint EU ownership and the capital commitments.
-50
-75
M ay Jul Sep No v Dec M ar A pr Capital: At the end of 2007, EIB had €164.8 bn in subscribed capital,
08 08 08 08 08 09 09 including €8.2 bn in paid in capital and €156.6 bn in callable capital,
2011-12 2013-15 2016-18
which is accessible if the bank needs the funds to meet its obligations.
Source: RBS , EIB
EIB had total shareholder’s equity of €34.5 bn. On 3/4/09, a €67 bn
capital increase was approved bringing total subscribed capital to
€232.4 bn.

Rating: Moody’s/S&P/Fitch: Aaa/AAA/AAA

According to S&P, EIB’s stable outlook and triple-A rating is based

primarily on the bank’s high quality assets and the expectation that it
would receive support from its member countries. At the end of 2007,
the bank had about €113 bn in callable capital from ‘AAA’ rated
member countries.8

E IB F u n d in g b y C u rre n c y 2 0 0 8 Debt Issuance & Outstanding: EIB funds loans through large
benchmark debt issuance, public bonds and smaller private
14% placements in core currencies of USD, EUR and GBP as seen to the
right. In 2008, USD issuance dominated driven by very attractive
15% 43% funding versus other currencies due to the USD/EUR basis swap rates.
o At the end of 2007, EIB’s debt outstanding totaled €254.2 bn.
o In 2008, EIB issued €59.5 bn versus €54.7 bn in 2007
28% dominated by benchmarks (72%), followed by other plain
USD E UR GBP O th e r
vanilla issuance (22%) and structured issuance (6%).
S o u rc e : R B S , E IB
o YTD, EIB has already issued €50 bn including 3 USD global
deals versus 8 USD last year as seen in the second graph
below.
o EIB projects 2009 debt issuance of €70 bn.

8 S&P 2/4/09 Ratings report on EIB

9
The Royal Bank of Scotland

EIB Gross Issuance by Currency

90

Agency/FDIC Guaranteed Debt Strategy | May 1 2009

80
70
70
59.5
60 54.7
49.9 49.8 48.1

EUR bn
50 42.1
40
30

20

10

0
2003 2004 2005 2006 2007 2008 2009 Est

EUR USD GBP JPY Others

Source: RBS, EIB

E IB U S D G lo b a l B o n d s Is s u e d in 2 0 0 8 & 2 0 0 9

P ric in g S p rd v s . M id S w a p s
5 100
80
4 60
3 40
20
2
$ B illio n

0
1 -2 0
-4 0
0 -6 0
3 yr 5 yr 5 yr 3 yr 3 yr 5 yr 3 yr 3 yr 3 yr 5 yr 5 yr

J a n - F e b - M a r- A p r- M a y- J u n - S e p - O c t- J a n - J a n - A p r-
08 08 08 08 08 08 08 08 09 09 09

S o u rc e : R B S , E IB

10
 The Royal Bank of Scotland

KfW

Agency/FDIC Guaranteed Debt Strategy | May 1 2009

KfW A verage Spreads vs. Tsy
What is KfW? KfW is the largest German public development bank.
175 The bank provides financing for Germany’s domestic and international
150
125 public policy objectives including economic, social, and ecological
100 development. KfW’s promotional business volume totaled €70.6 bn in
75
50
2008. The core business is lending to banks (53% of assets) and
25 lending to customers (24% of assets) followed by securities and
0 investments (11% of assets). At the end of 2008, assets totaled €394.8
M ay Jul Sep No v Dec M ar A pr
bn including loans and advances of €313.7 bn.
08 08 08 08 08 09 09
2011-12 2013-15 2016-18
Source: RBS , Kf W Who owns KfW? The Federal Republic of Germany holds 80% of KfW’s
capital with the German states owning the remaining 20%. The Bank’s
KfW A verage Spreads vs. Swaps
obligations are guaranteed by the German Government.
75
50
25
Guarantee of the Federal Republic of Germany: According to the Law
0 Concerning KfW, the Federal Republic guarantees all existing and
-25 future obligations of KfW with respect to money borrowed, bonds
-50 issued and derivative transactions entered into by KfW, as well as
-75 obligations of third parties that are expressly guaranteed by KfW when
M ay Jul Sep No v Dec M ar A pr due and payable. This obligation ranks equally with all other current
08 08 08 08 08 09 09
2011-12 2013-15 2016-18
and future unsecured and unsubordinated indebtedness of the Federal
Source: RBS , Kf W Republic of Germany.

Capital: At 12/31/08, KfW had paid-in subscribed capital of €3.3 bn

and total equity of €11.8 bn. Total equity has declined over the past
two years from a peak of €16.7 bn at the end of 2006 due to its 37.8%
stake in IKB, which suffered as a result of the subprime crisis. In
August 2008, IKB was sold to Loan Star Funds in accordance with the
German government’s IKB rescue package. According to the rating
agencies, the decline in capital has not affected the creditworthiness of
KfW due to the explicit guarantee of the German Government.9

Rating: Moody’s/S&P/Fitch: Aaa/AAA/AAA

According to S&P, KfW’s stable outlook and triple-A rating is based on

the support of the German federal government, its low-risk businesses,
and its generally stable financial profile.10

K fW C a p ita l M a rk e t F u n d in g 2 0 0 8
Debt Issuance & Outstanding: Benchmark bonds accounted for about
half of KfW’s funding in 2008, followed by publicly placed bonds
7% outside the benchmark programs (37%) and private placements (10%).
2%
12% Euro-based funding dominated (45%) followed by USD (34%) as seen
to the right.
45% o In 2008, KfW’s outstanding debt totaled €271.6 bn and KfW
raised €75.3 bn in the capital markets versus €64.6 bn in 2007.
o KfW expects to issue about €75 bn in 2009.
34%
E UR USD G BP JP Y O th e rs
S o u rc e : R B S , K fW

9 S&P 8/29/08 Ratings Report on KfW, page13

10 S&P 8/29/08 Ratings Report on KfW, pages 2-3

11
The Royal Bank of Scotland

K fW G ro s s Is s u a n c e b y C u rre n c y

90
7 5 .3

Agency/FDIC Guaranteed Debt Strategy | May 1 2009

75
80
70 6 4 .6
60 5 2 .1 5 0 .6 5 4 .2
4 8 .6

E U R bn
50
40
30
20
10
0
2003 2004 2005 2006 2007 2008 2009 E st

E UR USD GBP JP Y O th e rs
S o u rc e : R B S , K fW

The following graph displays KfW USD global bond issuance for 2008
($28 bn) and YTD 2009 ($14 bn) including new issue spreads versus
swaps.
K fW U S D G lo b a l B o n d s Is s u e d in 2 0 0 8 & 2 0 0 9

P ric in g S p re a d v s . S w a p s
6 120
5 100
80
4 60
$ B illio n

3 40
2 20
0
1 -2 0
0 -4 0
3 yr 5 yr 1 0 yr 5 yr 1 0 yr 3 yr 5 yr 3 yr 3 yr 5 yr 3 yr 2 yr

J a n - F e b - F e b - A p r- J u n - J u n - J u l- S e p - J a n - M a r- A p r- F e b -
08 08 08 08 08 08 08 08 09 09 09 09

S o u rc e : R B S , K fW

KfW Global Deal Distribution: In 2008, Central Banks dominated

demand for KfW’s dollar-denominated issuance at 64% while the
geographic investor base was diversified as seen below.

K F W $ D e a ls : D is trib u tio n b y In v e s to r T yp e

100%
10%
W e ig h te d A v g % o f D e a l

80% 14%
8% 23%
60% 16% 24%

40%
64%
54% 50%
20%

0%
2006 2007 2008
C e n tra l B a n k s F unds B a nks

S o u rc e : R B S , K fW

12
The Royal Bank of Scotland

K f W $ De a ls : Dis trib u tio n b y G e o g ra p h y

100%

Agency/FDIC Guaranteed Debt Strategy | May 1 2009

W e ig h te d A v g % o f D e a l
80%
15% 27% 17%
60% 15%
14% 20%
40% 18%
32%
20%
20%
19% 27% 20%
0%
2006 2007 2008
US A /Ca n a d a A s ia (w /o Ja p a n ) O th e r E u ro p e UK /Ire la n d
S o u rc e : R B S , K f W

13
 Supranational Comparison

Total Debt $ Debt Projected Equity/

Guarantee Issued Issued 2009 Debt Total Loans Subscribed Total Total Equity/ Risk W t
The Royal Bank of Scotland

$/€ bn Rating Owners Structure 2008 2008 Issuance Outstanding Assets Outstanding Capital Equity Assets Loans (BIS)* W ebsite
W ashington, DC Based Issuers
None, but strong
185 member implicit support
countries. US is from its owners
Aaa/AAA/ largest at (multilateral
IBRD AAA 16.4%. development bank). $19.0 $6.2 $30-$35 $87.7 $233.6 $99.1 $189.8 $41.5 17.8% 41.9% 0% www.worldbank.org
47 Member None, but strong
countries. US implicit support
is the largest, from its owners
Aaa/AAA/ holding 30% of (multilateral
IADB AAA capital. development bank). $11.1 $7.4 $15-$20 $49.4 $72.5 $51.2 $100.9 $19.4 26.8% 38.0% 0% www.iadb.org
179 Member None, but strong
countries. US is implicit support
largest, holding from its owners
Aaa/AAA/ 24.1% of the (multilateral
IFC NR capital development bank). $6.3 $2.0 $8.0 $21.3 $47.4 $21.1 $2.4 $15.8 33.3% 74.9% 0% www.ifc.org
European Based Issuers
None, but strong
implicit support
from its owners
Aaa/AAA/ 27 EU Member (multilateral
EIB AAA States development bank). € 59.5 $35.5 € 70.0 € 254.2 € 301.9 € 266.4 € 232.0 € 34.5 11.4% 12.9% 0% www.eib.org
80% German
Federal Gov't,
Aaa/AAA/ 20% German Guarantee from
KfW AAA States German Gov't € 75.3 $35.6 € 75.0 € 347.5 € 394.8 € 313.7 € 3.3 € 11.8 3.0% 3.8% 0% www.kfw.com
Source: IBRD, IADB, IFC, EIB, KfW , RBS, Note: KfW and IFC as of 12/31/08, IBRD and IADB as of 6/30/08, EIB as of 12/31/07, Bank for International Settlement assigns a 0% risk weight to claims
on multilateral developments banks under Basel II Framework. Please contact your appropriate regulator for further guidance.

Agency/FDIC Guaranteed Debt Strategy | May 1 2009

14
The Royal Bank of Scotland

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Agency/FDIC Guaranteed Debt Strategy | May 1 2009

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15