KfW ups volume of Japanese bond exchangeable for Deutsche Post shares

KfW, the state-owned bank used as a privatisation vehicle by the German government, said Monday it would increase the volume of its five-year Japanese bond exchangeable for shares in the semi-privatised German postal service Deutsche Post to 1.1 billion euros (1.4 billion dollars).

The bond, a so-called Uridashi bond which is debt issued by a non-Japanese borrower in Japan in a currency other than the yen, “met with overwhelmingly positive interest from retail investors in Japan, KfW said in a statement.

“We had announced a target size of 500 million euros. With a final transaction size of 1.1 billion euros, our expectations have clearly been exceeded,” said KfW chief Hans Reich.

The bond matures on February 3, 2010, and will pay an annual coupon of 0.5 percent.

Investors have the right to exchange the bond into Deutsche Post shares during a fixed term of five years for a price of 19.38 euros.

KfW and the German government currently hold stakes of 48.8 percent and 7.3 percent respectively in Deutsche Post.

“Should all investors exchange the two currently outstanding exchangeable bonds into Deutsche Post shares, the combined shareholdin of the government and KfW will fall to 46 percent, which is a major step in the privatisation of Deutsche Post,” KfW said.