MARC Ratings has affirmed its ratings on Cagamas Berhad’s bonds and sukuk issuances as follows:
- MARC-1/MARC-1IS on Conventional and Islamic Commercial Papers (CP/ICP) programmes with a combined aggregate limit of RM20.0 billion
- AAA/AAAIS on Conventional and Islamic Medium-Term Notes (MTN/IMTN) programmes of up to RM60.0 billion
The ratings outlook is stable. The key rating drivers remain Cagamas’ status as the national mortgage corporation and its strategic role in the domestic financial system, underpinned by its strong capitalisation and healthy liquidity position.
Cagamas’ purchases of loans and financing through its purchase-with-recourse (PWR) scheme rose to RM13.8 billion in 2021 (end-2020: RM7.0 billion). The increase was mainly due to purchases from financial institutions with smaller deposit bases which sold loans and financing in order to comply with Bank Negara Malaysia’s mandated net stable funding ratio as well as to meet liquidity requirements resulting from the implementation of moratorium and relief measures. The higher PWR purchases made during the year led to an increase in net outstanding loans and financing portfolio to RM36.0 billion (end-2020: RM33.2 billion). In contrast, no purchases have been made under its purchase-without-recourse (PWOR) scheme since 2018.
Cagamas’ capitalisation remained sound, underpinned by its exposure to highly rated counterparties as well as minimal impairment losses. As at end-2021, its total capital ratio stood at 42.4%, providing ample headroom to fund future business activities. Its funding and liquidity positions have also remained healthy with a funding base of RM35.4 billion as at end-2021. Profitability was lower with pre-tax profit of RM281.4 million (2020: RM301.4 million) on the back of maturing PWR assets and rundown of the PWOR portfolio. Going forward, the significant purchases of new loans and financing in 2021 should help support Cagamas’ operating performance in FY2022.