Malaysia’s national mortgage company, Cagamas, has issued a RM150 million (US$33.68 million) three-year ASEAN Social SRI Sukuk facility to fund the purchase of housing loans and eligible affordable house financing. Issued on the 29th June 2022, Cagamas also issued conventional medium-term notes worth RM100 million (US$22.45 million) in total to fund the projects. The sustainable Sukuk facility, to be redeemed at its full nominal value at maturity ranking pari passu with the company’s existing unsecured obligations, was concluded at 45bps above the Malaysian government issue.
Cagamas was established in 1986 to promote the broader spread of homeownership and growth of the secondary mortgage market. It extends liquidity to financial institutions through issuing Sukuk and bonds to finance the purchase of housing loans from financial institutions and non-financial institutions. The conventional tranches issued alongside the sustainable Sukuk will fund the purchase of conventional housing loans while the Sukuk proceeds will be channeled to fund eligible affordable housing. The mortgage company has issued a number of sustainable Sukuk in the past.
“The RM150 million transaction was concluded via [a] bought deal arrangement and the proceeds will fund the eligible affordable housing assets. The company had, in the past, issued a sustainability-related issuance via other modes of issuance including public bookbuilding and part of the issuance proceeds were meant for employment generation via SMEs and sustainable water and wastewater management,” Chung Chee Leong, CEO of Cagamas, told ISFI, commenting on how this issuance differs from previous issues.
Cagamas contributes to the Malaysian government’s agenda to promote affordable housing to the nation through the Skim Rumah Pertamaku (My First Home Scheme, SRP) through its subsidiary Cagamas SRP. The scheme, via the provision of mortgage guarantees, allows qualified house buyers to obtain up to 110% financing from participating banks, enabling them to own a home without paying a downpayment.
“The company will continue to extend it efforts via the acquisition of more affordable house financing under its current business model, Purchase With Recourse and Purchase Without Recourse Schemes, funded through the issuance of sustainability/social SRI Sukuk,” Chung told ISFI.
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Cagamas ASEAN Social SRI Sukuk 2022 RM150 million (US$33.68 million)  29th June 2022 |
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| Summary of terms and conditions | |
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Issuer |
Cagamas |
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Size of issue |
RM150 million (US$33.68 million) |
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Mode of issue |
Bought deal |
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Purpose |
To fund the purchase of affordable Islamic house financing |
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Tenor |
Three years |
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Issuance price |
At par |
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Profit rate |
4% |
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Payment |
Semi-annual |
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Currency |
Malaysian ringgit |
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Maturity date |
29th June 2025 |
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Lead manager(s) |
Hong Leong Bank |
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Principal advisor(s) |
CIMB Investment Bank, HSBC Bank Malaysia , HSBC Amanah Malaysia and Maybank Investment Bank |
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Bookrunner(s) |
Hong Leong Bank
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Governing law |
Malaysian law |
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Legal advisor(s)/council |
Zaid Ibrahim & Co, Christopher & Lee Ong |
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Islamic structure |
Commodity Murabahah |
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Listing |
No |
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Underlying asset |
Affordable Islamic house financing |
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Rating |
‘AAA’ (Malaysian Rating Corporation, RAM Ratings) |
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Shariah advisor(s) |
CIMB Islamic Shariah Committee, Maybank Islamic Shariah Committee, HSBC Amanah Malaysia Shariah Committee, Amanie Advisors |
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Tradability |
Tradable |
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Face value/minimum investment |
RM1,000 (US$224.51) |
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Investor breakdown |
Financial institutions |