Cagamas issues RM350m conventional medium-term notes

KUALA LUMPUR: Cagamas Bhd, the national mortgage corporation, is issuing RM350 million of two-year conventional medium-term notes.

Cagamas said in a statement on Thursday proceeds from the notes issue will be used to fund the purchase of housing loans from the financial system.

"The two-year CMTN was successfully concluded at a competitive yield of 3.42%, representing a spread of 10 basis points over the two-year interest rate swap.

"This was despite the uncertainty in global markets ahead of the presidential election and the Federal Open Market Committee rate decision in early November, which influences the market participants to weigh the possibility of an interest rate increase in the upcoming meeting," said Cagamas chief executive officer Chung Chee Leong. 

He said the issuance also displayed an increased acceptance of local-currency corporate bonds and sukuk among foreign investors, evidenced by the year-on-year growth in foreign holdings of Cagamas ringgit bonds from 0.6% to 7.8% as of September 2016.

Year-to-date, Cagamas has successfully issued a total of RM6.3 billion in the primary market consisting of RM4.9 billion in domestic currency and RM1.4 billion equivalent in foreign currencies. 

The company also achieved a secondary trading volume of RM13 billion, making it the highest traded corporate bond and sukuk in the local bond market thus far, and second only to government securities.

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

"They will be listed and tradable under the Scripless Securities Trading System," Cagamas added. - Bernama