News Column

Cagamas priced latest issues at spread over Government Securities

July 8, 2014

Cagamas Berhad, the National Mortgage Corporation of Malaysia, announced the issuance of one, two and three year Cagamas Sukuk Commodity Murabahah amounting to MYR 395 million. Proceeds from the issuance will be used to fund the purchase of Islamic financing from the financial system.

"Notably, the price guidance for the order book was deliberately quoted based on spread over the corresponding Government Securities to promote credit spread pricing culture for Private Debt Securities. The pricing convention which is widely accepted as best practice in developed markets would contribute positively to the maturity and sophistication of the domestic bond market," said Chung Chee Leong, President/Chief Executive Officer of Cagamas.

"Investors were very supportive of the pricing initiative as the order book recorded bid-to-cover ratio of more than 2 times and competitively priced with weighted average spread of 37 basis points and 50 basis points above the corresponding Government Investment Issues (GII) and Malaysian Government Securities (MGS) respectively," Chung added.

The IMTN, 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.

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Source: CPI Financial

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