KUALA LUMPUR (June 23): Cagamas Bhd, the National Mortgage Corporation of Malaysia, announced its first foreign currency issuance for the year under Cagamas three-year US$2.5 billion (RM9.36 billion) Conventional Multicurrency Medium Term Note (EMTN) Programme. It also concluded its RM500 million three-month Islamic Commercial Papers (ICP) pricing under its RM20 billion CP/ICP Programme.

The foreign currency EMTN is denominated in US dollars with a maturity of three years, amounting to US$100 million.

The US dollar EMTN is issued through its wholly-owned subsidiary, Cagamas Global P.L.C. and will be fully and unconditionally guaranteed by Cagamas, it said in a statement issued today.

“Our on-going assessment of the comparative advantage between foreign currency and domestic bond issuance coupled with proactive investors engagement has led to conclusion of this deal as international investors continue to look for high quality papers for portfolio diversification,” said Cagamas president and chief executive officer Chung Chee Leong.

Cagamas said that the three-year US dollar EMTN, rated A3 by Moody’s Investor Service, was competitively priced at a spread of 88bps over the three-year US Treasury (UST) bond yield.

In the ringgit space, the company successfully concluded its RM500 million three-month ICP pricing under its RM20 billion CP/ICP programme.

The ICP was issued under the Commodity Murabahah structure and proceeds of the issuance will be used to fund the purchase of Islamic financing from the financial system, it added.

“The three-month ICP was successfully priced at a very competitive level of 1 basis point below the three-month Kuala Lumpur Interbank Offered Rate (KLIBOR).

“The overwhelming bid-to-cover ratio of 3.1 times also reflected the investors’ confidence in the company’s credit strength,” added Chung.

The ICP, which will 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.

Cagamas, known as the National Mortgage Corporation of Malaysia, is the second largest issuer of debt instruments after the Government of Malaysia and the largest issuer of AAA debt securities in the market.

Since incorporation in 1986, Cagamas has cumulatively issued RM273.5 billion of conventional bonds and sukuk.