MARC Ratings has affirmed its AAAIS and AAA ratings on Cagamas MBS Berhad’s asset-backed Sukuk Musyarakah issuance (CMBS 2007-1-i) and fixed rate serial bonds issuances (CMBS 2005-2; CMBS 2007-2). The outlook on all ratings is stable.
Cagamas MBS was established to undertake the securitisation of conventional and Islamic home financing originated by the Malaysian government. The affirmed ratings and outlook continue to reflect the sustained high credit enhancement levels and very low default risk of the collateral pools as they are underpinned by a mortgage payment mechanism which involves the deduction of monthly salaries or pensions of government servants.
The performance of the collateral pools has remained strong, supported by the historically low cumulative default rates of the initial pool balances. This is reflected by the high credit enhancement levels of 518.8% for CMBS 2005-2, 329.0% for CMBS-2007-1-i and 893.2% for CMBS 2007-2. We note that for CMBS 2005-2 and CMBS 2007-2, the better-than-expected pool performance contributed to high accumulated cash and permitted investments which are more than sufficient to cover the outstanding issuance as well as the remaining coupon obligations.