KUALA LUMPUR (Nov 3): Cagamas Bhd's year-to-date (YTD) bond issuance amounts to RM12.4 billion after the company sold RM1.955 billion worth of conventional and Islamic bonds recently.

Cagamas, also known as National Mortgage Corp of Malaysia, issues corporate bonds and sukuk to finance the purchase of housing loans from financial and non-financial institutions. Cagamas said the provision of liquidity to financial institutions at a reasonable cost encourages further expansion of financing for houses at an affordable cost.

In a statement today, Cagamas said it issued RM1 billion worth of three-year conventional medium term notes (CMTN) and RM955 million worth of Islamic medium term notes (IMTN) with one-, three- and five-year tenures. Cagamas said it had priced the CMTN and IMTN prior to Malaysia's Budget 2018 announcement last Friday (Oct 27).

Today, Cagamas said: "Proceeds from the issuances will be used to fund mortgage loans as well as purchase Islamic home financing from the financial system."

Cagamas chief executive officer Datuk Chung Chee Leong said in the statement the conclusion of the CMTN and IMTN issuance will bring the company's total YTD issuance to RM12.4 billion, surpassing its 2017 target of RM11 billion.

"The outlook for global interest rates continued to rise with US Treasury yield climbing across the curve on the back of better-than-expected growth data; as well as tax reform optimism in the US. We saw the effect trickle down within the domestic market as the 5-year benchmark Malaysian Government Securities (MGS) yield increased by 13 basis points week-on-week. Despite substantial volatility and uncertainty ahead of the Malaysian 2018 Budget tabling, Cagamas managed to price its multiple ringgit issuances comprising RM1 billion 3-year CMTN, RM65 million 1-year IMTN, RM50 million 3-year IMTN and RM840 million 5-year IMTN competitively.

"The 1- and 3-year tenured bonds and sukuk were concluded via private placement whereas the 5-year tenured sukuk was concluded via book building. The order book received commendable response from a diverse range of investors which included pension funds, financial institutions, local corporates and foreign asset managers despite being only a half day book building exercise," Chung said.