Where to obtain the latest Cagamas rates?

The latest quoted Cagamas rates are published daily in two leading newspapers, namely the New Straits Times and The Star and also in the REUTERS and Cagamas website.

Is the Cagamas rate offered to the public?

No. It is only offered to financial institutions, selected corporations and the Government. Cagamas does not purchase loans and debts from non-banking institutions unless otherwise approved by its Board.

What affects the Cagamas rate?

Cagamas rates are dependent on current market conditions and Cagamas’ bond yields.

Will Cagamas go through the documentation to ensure the loans and debts are eligible for sale?

No. The selling institution represents and warrants that the loans and debts comply with the eligibility criteria. The external auditor of the selling institution will be appointed to audit the loans and debts sold to Cagamas on an annual basis.

Who will keep the security documents of the loans and debts sold to Cagamas?

The selling institution is appointed as custodian and therefore continues to keep the security documents.

Who can be the intermediary financial institution under the back-to-back arrangement?

Any commercial bank, finance company or merchant bank.

What if the loans and debts sold to Cagamas are in default?

The selling institution is required to repurchase such loans and debts from Cagamas and replace the same, if required to do so, with eligible loans and debts.

How do I purchase Cagamas debt securities?

Cagamas debt securities can be purchased from the primary market or secondary market. Only new issues are sold in the primary market. Investors can tender for new issues through Principal Dealers. Existing Cagamas papers can be purchased from the secondary market through financial institutions or holders of the securities.

Who are Principal Dealers?

Principal Dealers are financial institutions that are appointed and supervised by Bank Negara Malaysia (BNM) to underwrite auctions of selected papers such as Malaysian Government Securities (MGS), Treasury bills, Bank Negara bills and Cagamas debt securities. Principal Dealers are allowed to tender for securities on behalf of their customers in the primary market. They also provide bond prices for customers in the secondary market.

What is the minimum amount required to purchase Cagamas debt securities?

Minimum amount to tender for Cagamas debt securities in the primary market is RM1,000,000 while the minimum purchase from the secondary market is RM1,000.

Does Cagamas issue bond certificates to its investors?

All Cagamas debt securities issued are scripless. They are recorded and maintained under the Real Time Electronic Transfer of Funds and Securities (RENTAS) System. Holdings of Cagamas debt securities by customers are recorded in the customers’ account of the Authorised Depository Institutions.

Who are Authorised Depository Institutions?

Authorised Depository Institutions are financial institutions appointed by BNM to maintain the securities accounts of individual customers, withhold tax on non-resident beneficial holders, pay interest, dividend or redemption proceeds they receive to the beneficial owners and provide evidence of ownership to prove entitlement to voting rights.

How does Cagamas determine the coupon on its bonds?

The coupon on Cagamas bonds is derived from the weighted average of successful bids at the tender exercise.

Does Cagamas issue Islamic bonds?

Yes. Cagamas issues Islamic bonds (named Sanadat Mudharabah Cagamas) under the Islamic principle of Al-Mudharabah whereby the bondholders and the Company share the profits generated from the Company’s operations in a designated pool of Islamic assets. The Bondholders shall, however, entirely bear any losses or diminution, if any, in the principal amount of the Bonds.

How often is the interest / dividend on the bonds payable?

Semi-annually.

Is Cagamas debt securities callable?

No. There is no call option embedded in the Cagamas debt securities. However, Cagamas may, at any time, purchase the debt securities in the open market. Debt securities purchased by Cagamas may, at the discretion of Cagamas, be held, resold or cancelled at any time.