What is PWOR

• A contract whereby Cagamas purchases conventional and Islamic receivables without recourse for default risk



• Seller gets principal of the receivables up front and receives excess spread as servicer fee upon collection of loan installments

Key Features

1. Outright sale to Cagamas, no recourse for default risk



2. Islamic and conventional



3. Housing and auto financing



4. Standardized structure and documentation



5. Pricing from par to premium, depending on quality of assets



6. Cash purchase or settlement by Cagamas bonds



7. Excess spread paid to seller as servicer fee



8. Sellers will be appointed as Servicer for loans sold – customers not affected

Benefits

1. Transfer of credit risk



2. Full capital relief



3. Management of portfolio concentration risk



4. Shift to fee based income



5. Improve Return on Asset / Return on Risk Weighted Capital



6. Improve earning stability



7. Sell loans at premium - locking in profits



8. Stabilizing marketing strategy
   
   
   • Avoid curtailment of successful marketing centre or campaign when concentration occurs
   
   
   
   • Avoid temporary exit from market when conditions become challenging
   
   
   
9. No transaction cost
   
   
   • Savings on legal, financial advisors, arrangers, SPV set up costs etc
   
   
   
10. Fast turnaround time
    
    
    • 3 weeks compared to 3 – 9 months for ABS
    
    
    
11. Flexible transaction size
    
    
    • Do not require large transaction size to achieve economies of scale as in the case of ABS