Published March 17, 2009

Cagamas to issue RM2b worth of bonds

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(KUALA LUMPUR) Malaysian national mortgage firm Cagamas Bhd will issue more than RM2 billion (S$832 million) of bonds with terms ranging from one to 20 years by the end of March, a company source told Reuters yesterday.

The book running for the issue is ongoing, said the source. The issue comprises RM1.245 billion of conventional bonds and RM950 million of Islamic bonds, and will be arranged by Maybank Investment and OCBC, said a financial source. The company source did not confirm the arrangers.

Cagamas is Malaysia's second biggest debt issuer after the government and carries the highest credit rating AAA from local rating agencies. It issues debt and uses the funds to buy housing loans from financial institutions, enabling lenders to give out more loans.

The government-controlled company's debt issuance is expected to fall by as much as 30 per cent this year to a range of RM12-14 billion as home sales slow along with the Malaysian economy, chief executive officer Steven Choy said in a recent interview with Reuters.

Last year, Cagamas issued RM18 billion of debt. Malaysia's corporate debt market is expected to benefit from the government's RM15 billion guarantee plan to prop up credit ratings of investment-grade firms, encouraging them to issue debt to obtain financing.

But activity remains slow, traders said, with buyers still looking at highly rated issuers like Cagamas. 'People have a wait and watch attitude right now. A is looking at B and B is looking at C for what to do,' said a local trader at an investment bank who did not wish to be identified. -- Reuters