Cagamas concludes issuance of RM30 million Islamic Commercial Papers

This news bodes well for the local fixed income market

  

Kuala Lumpur – Cagamas Berhad (“Cagamas” or “the Company”), the National Mortgage Corporation of Malaysia, announced its issuance of RM300 million 3-month Islamic Commercial Papers (ICPs) to fund the purchase of house financing from the financial system.

Cagamas President/ Chief Executive Officer, Datuk Chung Chee Leong said, “We are pleased with the conclusion of the Company’s latest issuance which saw continued buying of our short-term papers on the back of positive news flow from the retainment of Malaysia on the World Government Bond Index (WGBI) Index. This news bodes well for the local fixed income market.”

“The ICPs were priced at the corresponding 3-month Kuala Lumpur Interbank Offered Rate (KLIBOR) plus 6 basis points (bps), or equivalent to 2.00% based on KLIBOR fixing on the pricing date. The spread was 21 bps above the corresponding Malaysia Islamic Treasury Bills,” added Datuk Chung.

The new issuance brings the Company’s aggregate issuance for the year to RM3.35 billion. The papers, which will be redeemed at their full nominal value upon maturity, are unsecured obligations of the Company, ranking pari passu and with all other existing unsecured obligations of the Company. They will be listed and tradable under the Scripless Securities Trading System.

About Cagamas

Cagamas Berhad (Cagamas), the National Mortgage Corporation of Malaysia, was established in 1986 to promote the broader spread of home ownership and growth of the secondary mortgage market in Malaysia. It issues corporate bonds and sukuk to finance the purchase of housing loans from financial institutions and non-financial institutions.  The provision of liquidity to financial institutions at a reasonable cost to the primary lenders of housing loans encourages further expansion of financing for houses at an affordable cost.

The Cagamas model is well regarded by the World Bank as the most successful secondary mortgage liquidity facility. Cagamas is the second largest issuer of debt instruments after the Government of Malaysia and the largest issuer of AAA corporate bonds and sukuk in the market. Since incorporation in 1986, Cagamas has cumulatively issued circa RM343 billion worth of corporate bonds and Sukuk. 

Cagamas’ corporate bonds and sukuk continue to be assigned the highest ratings of AAA/Stable/P1 by RAM Rating Services Berhad and AAA/MARC-1 and AAAIS/MARC-1IS by Malaysian Rating Corporation Berhad, denoting its strong credit quality. Cagamas is also well regarded internationally and has been assigned local and foreign currency long-term issuer ratings of A3 by Moody’s Investors Service Inc. that are in line with Malaysian sovereign ratings.

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