KfW IPEX-Bank has issued an inaugural, privately-placed public sector Pfandbrief, the German export bank said today (Thursday), noting that the funding instrument is indispensable to generate new business, especially in export credit agency-backed loans.

KfW IPEX-Bank, a subsidiary of German development bank KfW, is an international project and export finance institution. In December it obtained from the German financial supervisory authority, Bafin, a licence to issue public sector Pfandbriefe and it today said that it has launched its first issue.

The bank will not issue on the capital market, however, and instead issue Pfandbriefe as private placements that will be bought in their entirety by KfW.

“With these bonds the bank has successfully expanded its range of refinancing instruments as planned,” it said. “Pfandbrief refinancing lowers the funding costs for loans extended in market transactions that are eligible for the cover pool.”

In its 2013 annual report, at the time of writing only available in German, the bank said that refinancing via Pfandbriefe is “indispensable” for the generation of new business, in particular for export credit agency (ECA)-backed financing.