KOMMUNALKREDIT COVERED BOND KACB

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• KOMMUNALKREDIT COVERED BOND (KACB)
• Legal Aspects

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Covered Bond Market in Austriasince 1874
Law concerning Covered Bonds of Banks from
1905 Covered Bonds ("Fundierte
Anleihe") Mortgage Bond Acts ("Pfandbriefgesetz"
1927 und "Hypothekenbankgesetz" 1938) Mortgage
Bonds ("Pfandbriefe") Public Sector
Pfandbriefe ("Kommunalschuldverschreibungen") Ra
ilways Financing Acts from 1874 and
1910 "Eisenbahnprioritätsanleihe"
"Lokalbahnschuldverschreibungen"
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RegulationsLaw concerning Covered Bond from 1905

• Collateralization by defined cover pool
• Segregated account of the cover pool
• Governmental authority (Regierungskommissär)
  as trustee
• has to agree to every change of the cover pool
• In the case of insolvency investors have a claim
  on principal
• and interests
• The settlement process of secured instruments is
  conducted
• separately and independently from the common
  insolvency
• proceedings

No defaults of Austrian Covered Bonds during
nearly 100-year-history
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Eligible Assetsaccording to 1 Act from 1905
By law accepted assets
Improved cover pool for KACB
Cash
Cash
Securities and loans to the Public Sector
Securities and loans to the Public Sector
Securities and loans guaranteed by the Public
Sector
Securities and loans guaranteed by the Public
Sector
Mortgage Bonds
Trustee securities and Covered Bonds
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• KOMMUNALKREDIT COVERED BOND
• Instrument

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Advantages ofKommunalkredit Covered Bond

• Only loans and securities issued or guaranteed
  by the Public Sector are
• eligible assets
• Nominal and market value coverage
• For the period of insolvency proceedings the
  interest rate, currency risks
• and spread widening will be compensated
• Additionally to the claims of creditors the
  costs of insolvency proceeding
• will be covered
• Independent supervisory and control mechanism

Instrument with the quality of a Public Sector
Covered Bond (excellent rating)
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Cover PoolCover Assets and Liquidity
7.5 of the cover pool consists of
bonds. (Republic of Austria and Lower
Austria) 92.5 consists of loans whereof 94
were part of a public tender. (Upper Austria,
Water Management Fund). The characteristics of
the remainder are comparable to public tender
loans.


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Coverage Process IComparison of Assets and
Liabilities
Assets
Liabilities
Accrued interest of assets
Spread widening risk
Marketvalue
Interest rate risk
Currency risk
Safety Cover Value (SCV)
Insolvency proceeding costs
gt
Accrued interest of covered bond
Principal of covered bond

Nominal coverage and coverage on the basis of
risk-adjusted SCV
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Coverage Process II

• The cover pool will be calculated at least
  monthly and in the event of new issues
• or an increase of existing issues
• Calculation of the Safety Cover Value (SCV) of
  the cover pool
• ( market value in consideration of the
  statistical spread widening of public sector
• risk)
• Calculation of the interest rate sensitivity of
  the cover pool with Value-at-Risk
• models
• Determination of the currency gap and the
  inherent currency sensitivity regarding
• the asset-liability position
• Risk-adjusted SCV will be calculated (SCV
  including interest rate and currency
• risk)
• Nominal and market (risk-adjusted SCV) coverage
  of outstanding covered bonds is
• checked, and additional collateral added to the
  cover pool, if necessary

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• KOMMUNALKREDIT COVERED BOND
• Forthcoming Transaction

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Kommunalkredit Covered Bond(KACB) Conditions
Issuer Kommunalkredit Austria
AG Size Benchmark size Maturity intermediate KAC
B-Rating Aaa (Moodys) Syndicate BNP Paribas,
Citigroup, Deutsche Bank (Joint-Bookrunners/Leadma
nagers) Market making obligation for all
managers (incl. 9 Co-Lead
Managers) Listing Luxembourg, Vienna Documentatio
n Debt Issuance Programme
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• ANNEX

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KACBs in Comparison
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KACBs in Comparison
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KACBs in Comparison