KUALA LUMPUR: Cagamas Bhd has issued RM2.3bil in debt notes which would be used to finance the purchase of mortgage loans from the financial system.
The National Mortgage Corporation of Malaysia said on Tuesday the debt notes comprised RM700 mil six-month commercial papers (CP) as well as RM1.6bil conventional medium term notes (CMTN). The tenures were of one, three and five years.
Proceeds from the issuances will be used to fund the purchase of mortgage loans from the financial system.
Cagamas CEO Datuk Chung Chee Leong said that due to heightened uncertainty in rates for the medium to longer term, there was a spike in interest for short term bonds and sukuk, with a total of 38% of secondary trades concluded within the last month.
The trades, he said, focused on bonds and sukuk with maturities of one year or less which led to tightening in yield of an average 20 basis points (bps) month-on-month for outstanding government bonds and sukuk with maturities of one year.
“Capitalising on the current market’s interest in short-term papers, Cagamas has managed to competitively price its RM700mil six-month CP at the six-month KLIBOR flat,’’ he added.
Chung also said Cagamas managed to competitively price its aggregate RM1.6bil CMTN comprising RM10mil one-year, RM90mil three-year, and RM1.5bil five-year tenures.
This was notwithstanding subdued market activity prior to the expected interest rate hike by the Federal Reserve at its final Federal Open Market Committee (FOMC) meeting for 2017 on Dec 13, together with the upcoming Christmas and New Year celebrations.
“The multiple issuances brings the year-to-date (YTD) issuances amount to an aggregate RM15bil, surpassing the total 2016 issuances by 103%.
“The net increase in total outstanding of approximately RM5bil has increased the total Cagamas papers outstanding in the market to more than RM30bil,” added Chung.
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.
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