Malaysia’s national mortgage corporation Cagamas on December 3 tapped the US dollar bond market for the first time as it priced a US$500 million offering as it seeks to establish a new benchmark in this market for Malaysian issuers.

 

The five-year bonds were priced at a spread of 115bp over the US treasuries, or 15bp tighter than the initial guidance of 130bp. They performed in the immediate aftermarket as they further tightened by between 4bp and 6bp on December 4.

 

“Our maiden US dollar issuance will clearly establish Cagamas’ position in the international bond market as a new US dollar benchmark for Malaysian issuers and significantly increases opportunities for other Malaysian issuers to tap liquidity in the offshore market,” says Cagamas president and CEO Chung Chee Leong.

 

The bonds, issued through Cagamas Global PLC, were drawn under the company’s newly-established US$2.5 billion conventional multi-currency medium-term note programme. The proceeds will be used for working capital and general corporate purposes.

 

The offering garnered a total order book of US$2.4 billion with 65% of the bonds allocated in Asia, 20% in Europe and 15% in offshore US. By type of investors, fund managers accounted for 63%, banks 21%, sovereign wealth funds 9%, insurance companies 5% and private banks 2%.

 

“Strong interest from diverse market segments, which included top global money managers and sovereign wealth funds across regions, underscore the international investors’ confidence in Malaysian corporate investment grade issues that offer strong value proposition for international investors to achieve greater diversification in their credit portfolio,” adds Chung.

 

CIMB Investment Bank, HSBC, RHB and Standard Chartered acted as the joint bookrunners and lead managers for the transaction.

 

A frequent issuer in the sukuk market, the latest bond deal marks a further diversification in Cagamas’ conventional funding sources. In early November, it announced its inaugural Hong Kong dollar offering amounting to HK$1 billion (US$129 million) for 3-1/2 years. In September, it printed the first and largest renminbi bond by a Malaysian issuer with a three-year 1.5 billion renminbi (US$246 million) issue at a fixed rate coupon of 3.70%.