LCH.Clearnet To Accept Bonds Issued By KfW As Margin Collateral

LCH.Clearnet Limited (LCH.Clearnet), as part of its ongoing plans to broaden the range of acceptable margin collateral, is to accept bonds issued by the Kreditanstalt für Wiederaufbau (KfW) from November 1, 2011.

The initiative will offer greater flexibility to clients whilst maintaining robust risk management standards. Approximately €150 billion of securities will be eligible to be pledged as margin.

Founded in 1948, KfW ranks among the 10 largest financial institutions in Germany and is recognised as one of the world’s most active bond issuers. Debt securities issued by KfW have been backed by the explicit, direct and unconditional guarantee of the Federal Republic of Germany since 1998 and are considered to be of the highest credit quality, rated AAA by all three major agencies, with a stable outlook.

Andrew Howat, Head of Collateral and Liquidity Management at LCH.Clearnet said: “Extending the number of issuers acceptable as margin collateral within the highest of risk management standards brings additional flexibility and security to the markets we serve. Their regular issuance, strong liquidity and explicit government guarantee mean that KfW securities are a natural form of collateral.  KfW is seen as Germany’s flagship development agency, considered to be of the highest quality among European Government related entities.”