Friday, Jul 09, 2004
MARC has reaffirmed the long-term and short-term issuer ratings of Cagamas Bhd (Cagamas) at AAA and MARC-1 respectively. The reaffirmation reflects the strong ability and flexibility of the Company to meet its financial commitments, supported by a favorable portfolio of loans and debts with full recourse to the selling institutions, its strong capitalization and a proactive management team. As the country’s National Mortgage Corporation, the Company’s strategic role in the development of the secondary mortgage market and the strength of the Company’s shareholders are positive factors.
Despite operating within an environment of excess liquidity and low interest rates, Cagamas posted an increase in both outstanding loans and debts held as well as in loans and debts purchased during the year. The volume of loans and debts purchased during the year is by far the largest in a single year for Cagamas at RM11,112 million.
Cagamas’ assets remains predominantly anchored in housing loans, representing 56.6% of total outstanding loans and debts as at December 2003, followed by hire purchase and leasing debts at 43.2%. Cagamas’ well defined terms and conditions for purchase of loans and debts on recourse contributed to the superior quality of its assets while its prudent management of credit exposure to selling institutions ensured that Company was not overly exposed to any one particular financial institution. In the long run Cagamas is expected to emphasize the development of purchases on a without recourse basis, as the Company pursues its role in assisting in the development of a true domestic securitization market.
Cagamas employs a close matching of its funding mix with the different interest rate profile of the loans and debts purchased. The proportion of fixed rate purchases funded by fixed rate bonds remains high. The lower interest income from mortgage loans during the year saw the Company’s profit before tax and zakat slip lower by 7.2% to RM192.5 million.
Despite operating within an environment of excess liquidity and low interest rates, Cagamas posted an increase in both outstanding loans and debts held as well as in loans and debts purchased during the year. The volume of loans and debts purchased during the year is by far the largest in a single year for Cagamas at RM11,112 million.
Cagamas’ assets remains predominantly anchored in housing loans, representing 56.6% of total outstanding loans and debts as at December 2003, followed by hire purchase and leasing debts at 43.2%. Cagamas’ well defined terms and conditions for purchase of loans and debts on recourse contributed to the superior quality of its assets while its prudent management of credit exposure to selling institutions ensured that Company was not overly exposed to any one particular financial institution. In the long run Cagamas is expected to emphasize the development of purchases on a without recourse basis, as the Company pursues its role in assisting in the development of a true domestic securitization market.
Cagamas employs a close matching of its funding mix with the different interest rate profile of the loans and debts purchased. The proportion of fixed rate purchases funded by fixed rate bonds remains high. The lower interest income from mortgage loans during the year saw the Company’s profit before tax and zakat slip lower by 7.2% to RM192.5 million.