Overwhelming Response To Cagamas’ Issuance Of Malaysia's First Asean Sustainability SRI Sukuk For Affordable Housing

Kuala Lumpur, 22 October 2020 – Cagamas Berhad (“Cagamas” or “the Company”), the National Mortgage Corporation of Malaysia, announced that the Company had successfully priced a combined issuance of its inaugural ASEAN Sustainability SRI Sukuk (“SRI Sukuk”) and Islamic Medium Term Notes (“IMTNs”) totalling RM450 million. The issuance, comprising a 3-year RM100 million SRI Sukuk and RM350 million IMTNs will be issued based on the Islamic principle of Murabahah under the Company’s existing RM60 billion Islamic Medium-Term Notes Programme. The proceeds from the SRI Sukuk will be used to fund specifically the purchase of eligible Islamic financing for affordable housing whilst the proceeds from the IMTNs will be used to fund Islamic house financing.

Datuk Chung Chee Leong, President/Chief Executive Officer said, “We are pleased with the overwhelming response to Cagamas’ issuance of the Company’s inaugural ASEAN Sustainability SRI Sukuk to fund Islamic financing related to affordable housing, subscribed by socially responsible investors and executed at a competitive rate.”

The issuance, conducted via a public book building exercise led solely by RHB Investment Bank, received an overwhelming response from investors and achieved a total order close to RM2 billion at initial price guidance. This enabled the Company to progressively improve the price guidance, leveraging on the demand momentum to close at a final price of 2.23% p.a. for the SRI Sukuk and 2.25% p.a. for the IMTNs, with a combined final book-to-cover ratio of 3.3 times. The final prices for the issuance represent 39 and 41 basis points above the corresponding 3-year Malaysian Government Investment Issue.

“Cagamas is encouraged by the exceptionally strong level of support from investors as evidenced by the lower yield recorded on the SRI Sukuk compared to the IMTNs. We had participation from a diversified pool of investors, including a statutory body, sovereign wealth funds, pension funds, financial institutions, asset managers and insurance companies. We would like to thank the many stakeholders who have helped to make Cagamas’ maiden SRI Sukuk issuance so successful and would like to express our appreciation for the effort and contribution by the RHB Group in this collaboration,” continued Datuk Chung.

The SRI Sukuk for affordable housing is assigned the highest Social Benefit rating of Tier1 by RAM Sustainability Sdn Bhd under Cagamas’ Sustainability Bond/Sukuk Framework (“The Framework”). The Framework comprises two social solutions namely affordable housing and employment generation via Small and Medium Enterprises; and five green solutions which include renewable energy, energy efficiency, green buildings, low-carbon transportation and sustainable water and wastewater management.

“The positive conclusion of this issuance is a strong testament of Cagamas’ commitment to support the development of industry-led sustainable product offerings such as affordable housing loans and financings. It is indeed a meaningful milestone for Cagamas amidst current challenging market conditions,’’ added Datuk Chung.

The transaction marks the Company’s seventeenth issuance exercise for the year and will bring the year-to-date issuance amount to RM6.68 billion.

The papers, which will be redeemed at their full nominal value upon maturity, will be unsecured obligations of the Company, ranking pari passu with all other existing unsecured obligations of the Company. They will be listed and tradable under the Scripless Securities Trading System.