CAGAMAS MBS BERHAD (CMBS 2007-1-i) - 2022 |
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| Report ID | 605389003796 | Popularity | 646 views 36 downloads | |||||
| Report Date | Mar 2022 | Product | ||||||
| Company / Issuer | Cagamas MBS Bhd | Sector | Residential Mortgages | |||||
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| Rationale |
Rating action MARC Ratings has affirmed its rating of AAAIS on Cagamas MBS Berhad’s (Cagamas MBS) RM2,110.0 million asset-backed Sukuk Musyarakah issuance (CMBS 2007-1-i) with a stable outlook. Rationale The rating incorporates CMBS 2007-1-i’s strong credit enhancement level of 205.3% as at reporting date of November 29, 2021, based on outstanding principal of non-defaulted home financing of RM762.6 million and combined cash and permitted investments of RM489.6 million. Its cash balances are sufficient to meet its next redemption of RM320.0 million as well as its remaining coupon obligations of about RM25.9 million under tranche 6. The next redemption is due on May 27, 2022. Cagamas MBS was established to undertake the securitisation of conventional and Islamic home financing originated by the Malaysian government. CMBS 2007-1-i is backed by a pool of government staff Islamic home financing (GSIHF), or Portfolio 2007-1-i. Direct monthly salary/pension deductions form the source of repayment for CMBS 2007-1-i. The collateral pool performance of CMBS 2007-1-i has remained strong, reflected by the portfolio’s historically low cumulative default rate (CDR) of 0.25% of the initial pool balance, well below MARC Ratings’ revised projection of 2.07%. The GSIHF defaults, classified as accounts in arrears for more than nine months, were mainly due to pending assessment on the status of borrower accounts as well as pending claims on mortgage reducing term takaful (MRTT). The cumulative prepayment rate on Portfolio 2007-1-i stood at 15.11% as at Quarter 58, with the average quarterly prepayment rate remaining stable at 0.26% (Quarter 55: 0.26%). Risk of negative carry arising from higher-than-expected prepayments is addressed by the conditional pass-through mechanism that allows for early redemption of the sukuk in reverse order with the last tranche being paid first. Rating outlook/trajectory The stable outlook reflects the sustained high credit enhancement level of CMBS 2007-1-i, among other key factors; the outlook is not expected to change over the redemption period. Key strengths • Strong credit enhancement supported by high collateralisation • Satisfactory performance of collateral pool Key risk • Risk of negative carry from higher-than-expected prepayments |
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