Cagamas raises US$243 million in new funds to purchase housing loans
Transaction totals one billion ringgit, including 700 million ringgit in one-year fixed rate conventional medium term notes
18 Jul 2019 | Chito Santiago

Malaysia’s national mortgage corporation Cagamas has raised a total of one billion ringgit (US$243.30 million) to finance the purchase of housing loans from the financial system.

The transaction, announced on July 18, comprised of 700 million ringgit in one-year fixed rate conventional medium term notes (CMTN), 200 million ringgit in three-month conventional commercial papers (CCP) and 100 million ringgit in one-year floating rate conventional medium term notes (FRN).

The 700-million-ringgit one-year CMTN issuance was concluded via the re-opening of an existing bond tranche that represented the company’s first re-opening exercise for the year. The outstanding bond, which has a remaining maturity of one year and an outstanding amount of 50 million ringgit, was successfully upsized to 750 million ringgit, post-reopening exercise.

“The conclusion of the deal represents part of the company’s ongoing initiatives and continued commitment in promoting secondary liquidity for its outstanding local currency bonds and sukuk in the domestic market,” says Cagamas president and CEO Datuk Chung Chee Leong.

Both the CCP and FRN were strategically priced following Bank Negara Malaysia’s announcement to maintain the overnight policy rate at 3% during its monetary policy committee meeting on July 9.

The 200 million ringgit three-month CCP was concluded via public offering, which recorded a commendable bid-to-cover ratio of 2.6x and competitively priced at 10bp below the corresponding three-month Kuala Lumpur interbank offer rate (Klibor). In addition, the 100 million ringgit one-year FRN was priced at par with the three-month Klibor and represented Cagamas’ first FRN issued for the year.

Chung says the concluded FRN also marked the first such issuance within the domestic AAA-rated segment and further underscores the company’s ability in diversifying its funding options to a wider pool of investors.

The papers, which will be redeemed at their full nominal value upon maturity, are unsecured obligations of Cagamas, ranking pari passu among themselves and with all other existing unsecured obligations of the company.

In 2018, Cagamas recorded its highest total aggregate issuances since 2008 at 15.8 billion ringgit, comprising 22 new Cagamas debt securities and five new Cagamas foreign currency issuances.

Cagamas’ initiative to continue innovating new foreign currency offerings was well-received by investors, leading to successful issuances in Hong Kong dollars and Singapore dollars, including an inaugural issuance of US dollar FRNs.

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