The international financial crisis was also reflected in the bond markets. Confidence in corporate solvency suffered significantly. The collapse of the investment bank Lehman Brothers in September nearly brought lending to a halt. At the beginning of December, the European CDS index, iTraxx Europe, which is made up of prices paid to hedge the credit risk of 125 major European companies using five-year credit default swaps (CDSs), hit a record high of more than 200 basis points. RWE distanced itself from this trend. Five-year CDSs for our company were occasionally at over 90 basis points in March, before falling significantly. CDS prices rose again in the fourth quarter, but remained below the March level. They reached this level again in January 2009. This was because we announced our intention to acquire the Dutch-based utility Essent. The transaction will cause our net debt to increase. Irrespective of this, RWE is considered a company with a solid financial position. We benefited from our strong creditworthiness again in November 2008 and February 2009 when we issued a combined nominal €5 billion in bonds at relatively favourable rates (see chapter RWE bonds).

Development of RWE‘s five-year credit default swap (CDS) compared with the CDS index iTraxx Europe in basis points