Cagamas Berhad, the National Mortgage Corporation of Malaysia, one of the most prolific issuers of Sukuk, continues to play a major role in Sukuk issuance and in the Islamic mortgage securitization market in Malaysia, finishing 2019 with a string of issuances in December.
On 23 December Cagamas issued a combined bond/Sukuk offering totalling RM1.2 billion, comprising RM600 million Islamic Commercial Papers (ICPs), RM200 million Conventional Commercial Papers (CCPs) and RM400 million Islamic Medium Term Notes (IMTNs). The proceeds from ICPs, CCPs and IMTNs issuance will be used to fund the purchases of mortgage loans and Islamic house financing from the domestic financial system.
“We are pleased to conclude the year with [further] successful issuances representing the Company’s 26th issuance exercise which brings the aggregate issuances for the year to RM10.2 billion, marking the Company’s third consecutive year surpassing RM10 billion worth of issuances,” said Datuk Chung Chee Leong, President/Chief Executive Officer of Cagamas.
The 6-month CCPs/ICPs was competitively priced at 3.25%, 20 basis points above 6-month Malaysia Treasury Bills and 17 basis points above Malaysian Islamic Treasury Bills, while the 1-year IMTNs was competitively priced at 3.29%, 26 basis points above the corresponding Malaysia Government Investment Issue. “It has been an eventful year for both domestic and global markets. The Company remains optimistic as it continues to fulfill its mandate as a financial intermediary between the capital market and the Malaysian housing sector,” added Datuk Chung.
On 12 December Cagamas similarly issued a total RM1.1 billion debt securities comprising RM300 million 3-year Conventional Medium Term Notes (CMTNs), RM300 million 3-year Islamic Medium Term Notes (IMTNs) and RM500 million 3-month Conventional Commercial Papers (CCPs).
Cagamas also issued on 28 November a multi-tenured RM500 million Islamic Medium Term Notes (IMTNs) comprising RM20 million 1-year IMTNs, RM30 million 3-year IMTNs and RM450 million 5-year IMTNs.
All the above issuance proceeds will be used to fund the purchase of mortgage loans and Islamic house financings from the financial system. The papers, which will be redeemed at their full nominal value upon maturity, are unsecured obligations of the Company, ranking pari passu among themselves and with all other existing unsecured obligations of the Company.
Cagamas’ corporate bonds and Sukuk continue to be assigned the highest ratings of AAA and P1 by RAM Rating Services Berhad and AAA/AAAIS and MARC-1/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.
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 RM317.6 billion worth of corporate bonds and Sukuk.