Thursday, Jun 19, 2003
The long-term and short-term issuer ratings of Cagamas Berhad (Cagamas) have been reaffirmed at AAA and MARC-1 respectively. This reflects the strong ability and flexibility of the Company to meet its financial commitments, the favorable portfolio of loans and debts with full recourse to the selling institutions, strong capitalization and a proactive and innovative 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.
Cagamas continues to broaden its asset classes, with 62.8% of total purchases during the year consisting of hire purchase and leasing (HPL) debts. As at end 2002, the Company purchased 15.9% of the housing loans and 18.6% of the HPL debts outstanding in the banking system. The changing trend towards HPL debts is very much in line with market conditions, as strong demand for motor vehicles pushed hire purchase lending by the finance companies higher. Nevertheless, Cagamas is well able to manage the differing portfolio characteristics as all loans and debts that become defective are repurchased and replaced, with the exception of housing loans, where it remains optional. In the long run, Cagamas is expected to further emphasize the development of purchases on a without recourse basis, as the Company pursues its role in developing 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 continued adoption of a fine pricing policy will however continue to keep profit margins at bay.
In addition to the marketability of Cagamas’ debt issues, the Company has good access to the capital and money markets. MARC credits Cagamas’ management as proactive and innovative, while employing prudent operating and asset-liability management strategies.
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.
Cagamas continues to broaden its asset classes, with 62.8% of total purchases during the year consisting of hire purchase and leasing (HPL) debts. As at end 2002, the Company purchased 15.9% of the housing loans and 18.6% of the HPL debts outstanding in the banking system. The changing trend towards HPL debts is very much in line with market conditions, as strong demand for motor vehicles pushed hire purchase lending by the finance companies higher. Nevertheless, Cagamas is well able to manage the differing portfolio characteristics as all loans and debts that become defective are repurchased and replaced, with the exception of housing loans, where it remains optional. In the long run, Cagamas is expected to further emphasize the development of purchases on a without recourse basis, as the Company pursues its role in developing 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 continued adoption of a fine pricing policy will however continue to keep profit margins at bay.
In addition to the marketability of Cagamas’ debt issues, the Company has good access to the capital and money markets. MARC credits Cagamas’ management as proactive and innovative, while employing prudent operating and asset-liability management strategies.