Cagamas bucks market with largest single-day issuance in seven years
Conventional bond-sukuk deal proceeds will finance Malaysian housing loans
3 Dec 2020 | Chito Santiago

Malaysia’s national mortgage corporation Cagamas priced the largest amount of issuance in a single day in seven years as it issued 2 billion ringgit (US$491 million) in different tranches in both conventional bonds and sukuk.

The offerings, announced on December 3, consisted of 700-million-ringgit three-month conventional commercial papers, 300-million-ringgit Islamic commercial papers, 500-million-ringgit one-year Islamic medium-term notes, and 500-million-ringgit one-year conventional medium-term notes.

The proceeds from the issuances will be used to fund the purchase of housing loans from the financial system.

“While mixed sentiments slowly descended into the fixed-income space, the company managed to price its 2-billion-ringgit combined issuances competitively at between 30 basis points (bps) and 45bps above the respective Malaysian government securities and investment issues,” says Cagamas president and CEO Chung Chee Leong, adding that the successful conclusion of the offerings came about despite growing caution on the domestic front, arising from the parliamentary voting of Budget 2021, coupled with potential risk-on sentiments as global markets were buoyed by news of imminent Covid-19 vaccines.

The transaction marks Cagamas 20th issuance exercise for the year and brings the year-to-date issuance amount to 9.32 billion ringgit. Since incorporation in 1986, it has cumulatively issued about 337.2 billion ringgit of corporate bonds and sukuk.

The papers will be redeemed at their full nominal value upon maturity and will be listed and tradable under the scripless securities trading system.

In October of this year, Cagamas announced the issuance of its first Asean sustainability bond totalling100 million ringgit, comprising 35 million ringgit for one year, 20 million ringgit for two years, and 45 million ringgit for 2.5 years. Proceeds from the issuance will be used to primarily fund the purchase of eligible non-carbon-emitting industrial hire-purchase receivables for small and medium-sized enterprises that contribute to environmental sustainability.