Thursday, Sep 23, 2004
MARC has assigned an indicative rating of AAA to Cagamas MBS Berhad’s (Cagamas MBS) proposed RM[1,500.0] million secured fixed-rate serial bonds. The rating is based on the stringent core and portfolio eligibility criteria of the securitized mortgages, comprising mortgages of government pensioners only, the representation and warranty provided by the Originator, the Federal Government of Malaysia (GOM); deduction of mortgage payments at source through centralised pension deductions administered by Public Services Department or Jabatan Perkhidmatan Awam (JPA) and Ministry of Defence (MINDEF); acquisition of portfolio at a discount in excess of [20]% based on a valuation as at the purchase date and ability of the projected cash flow to withstand default and prepayment stresses.
Cagamas MBS is a limited purpose entity and a newly incorporated wholly-owned subsidiary of Cagamas Berhad (Cagamas), established with principal activities restricted to acquiring conventional housing loans or Islamic home financing from the GOM, and issuing asset-backed securities for the purpose of acquiring the housing loans/home financing thereof.
On closing, the GOM as Originator, will assign its rights, title, benefit and interest in, to, under and in respect of a portfolio of mortgage assets with an outstanding principal balance of RM[1,935.7] million, by way of absolute equitable assignment, to Cagamas MBS.
To fund the purchase, Cagamas MBS will issue RM[1,500.0] million fixed-rate serial bonds comprising four series with maturities on the third, fifth, seventh and tenth anniversary from the issuance date. The purchase will be undertaken retrospectively, whereby the pool of mortgage assets is acquired based on its portfolio valuation as at 29th February 2004.
The GOM’s Housing Loans Division or Bahagian Pinjaman Perumahan (BPP) will act as the Servicer of the securitized pool of mortgage assets. The monthly collections by BPP will be channelled to Cagamas MBS on a quarterly basis.
As the weighted average yield on the GSHLs of 4.0% is lower than the weighted average coupon on the bonds, the negative spread will be funded by the principal cash flow stream from the mortgage assets. The transaction is a conditional reverse-pay structure with a limited pass-through feature which allows surplus cashflow to be paid to the outstanding bonds with the longest maturity i.e. series four bonds maturing in year ten, if the cash balance exceeds RM[66] million after the respective scheduled principal repayments on series one, two and three bonds. The RM[66] million to be retained in the cashflow, before pass-through of prepayments are triggered, provides adequate liquidity buffer to allow timely interest payments and redemption of the intermediate tranches.
Note : The indicative rating is based on information provided to MARC as at July 28, 2004. The final rating on the transaction are contingent on conclusive review of the final version of legal documents, confirmation of the final asset pool, confirmation of the final transaction mechanics and resolution of any outstanding issues that MARC deems as pertinent. On transaction closing, MARC will announce the final rating assigned.
Cagamas MBS is a limited purpose entity and a newly incorporated wholly-owned subsidiary of Cagamas Berhad (Cagamas), established with principal activities restricted to acquiring conventional housing loans or Islamic home financing from the GOM, and issuing asset-backed securities for the purpose of acquiring the housing loans/home financing thereof.
On closing, the GOM as Originator, will assign its rights, title, benefit and interest in, to, under and in respect of a portfolio of mortgage assets with an outstanding principal balance of RM[1,935.7] million, by way of absolute equitable assignment, to Cagamas MBS.
To fund the purchase, Cagamas MBS will issue RM[1,500.0] million fixed-rate serial bonds comprising four series with maturities on the third, fifth, seventh and tenth anniversary from the issuance date. The purchase will be undertaken retrospectively, whereby the pool of mortgage assets is acquired based on its portfolio valuation as at 29th February 2004.
The GOM’s Housing Loans Division or Bahagian Pinjaman Perumahan (BPP) will act as the Servicer of the securitized pool of mortgage assets. The monthly collections by BPP will be channelled to Cagamas MBS on a quarterly basis.
As the weighted average yield on the GSHLs of 4.0% is lower than the weighted average coupon on the bonds, the negative spread will be funded by the principal cash flow stream from the mortgage assets. The transaction is a conditional reverse-pay structure with a limited pass-through feature which allows surplus cashflow to be paid to the outstanding bonds with the longest maturity i.e. series four bonds maturing in year ten, if the cash balance exceeds RM[66] million after the respective scheduled principal repayments on series one, two and three bonds. The RM[66] million to be retained in the cashflow, before pass-through of prepayments are triggered, provides adequate liquidity buffer to allow timely interest payments and redemption of the intermediate tranches.
Note : The indicative rating is based on information provided to MARC as at July 28, 2004. The final rating on the transaction are contingent on conclusive review of the final version of legal documents, confirmation of the final asset pool, confirmation of the final transaction mechanics and resolution of any outstanding issues that MARC deems as pertinent. On transaction closing, MARC will announce the final rating assigned.