Methods and models.

LBBW Research: Top quality with perceptible added value for our clients.


LBBW Research covers more than 400 equity and bond issuers, respectively. By means of in-depth analyses, we create clear-cut value-added for our clientele, which consists of distinguished financial-market participants, predominantly from the investors’ side. The coverage spectrum in credit research ranges from supranational institutions via sub-sovereign and quasi-sovereign issuers all the way till commercial banks as well as non-financial corporates.

For corporates, our focus is on our Western-European home turf, combined with a high degree of industry specialization. In the SSA sphere, it is, above all, a respective guarantee mechanism which influences the financial strength of a particular issuer. LBBW Research scrutinizes the guarantee mechanisms from twelve countries.



LBBW Credit Research fosters close ties between equity and fixed-income analysis. We formulate recommendations related to invest opportunities and credit risks alike. In 35 different publications, we provide general assessments of individual issuers, we comment on new emissions available, and we are on the spot when we need to react quickly to current developments.


LBBW Research uses models in its work. Worth noting are some model approaches from the different areas of macroeconomics, in addition to stocks and credit analyses; here in brief:


Capital market interest rate forecasts


LBBW Research uses several econometric models to derive the forecasts for the euro swap curve. One of the models that we regularly update, calculates a fair value for the steepness of the swap curve measured against the difference between 10 and 2-year swaps. It estimates a fair curve steepness based on real 3-months EURIBOR, the HICP for the eurozone, its standard deviation and the eurozone's economic sentiment.


Exchange rate forecasts


LBBW Research also uses fundamental data as orientation for exchange rate forecasts. An important factor for the medium to long-term rate development is the purchasing power parity of the exchange rates. They constitute a type of gravitational centre to which the exchange rates tend to return to. However, in the short to medium term the deviations from the purchasing power parity can be significant. The following, as well as other factors, play a role here: (anticipated) interest rate differences, risk appetite and current market positioning.


Stock exchange forecasts


Discounted cash flow model methods are based on future cash flow surpluses determined within the context of corporate planning and discounted to the valuation date with the aid of capital costs. In doing so, taxes payable (e.g. commercial tax or income tax) are incorporated into the evaluation. The net present value or the capitalized value calculated in this way is the discounted cash flow.


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