Cagamas, Malaysia's state-owned secondary mortgage agency, certainly knows how to test the patience of potential underwriters for its securitizations. When it spent four months deciding which bank would arrange its first Islamic MBS - eventually choosing HSBC (see ASR 3/21/05) - many Asian bankers reckoned it was the most drawn out mandate process in recent memory.

Despite holding this unenviable distinction, Cagamas has begun deliberating over a forthcoming SME loan-backed offering. As the end of 2004 approached, the agency sent out RFPs, with bids due at the end of January. With the selection of an advisor for its Islamic deal still unresolved, a decision over the SME arranger has continually been pushed back. The agency eventually informed interested parties a decision would be made by early April.

As that deadline was shifted to May 13, due to scheduling issues,' a trio of consortia - Aseambankers, Citibank Global Markets and Maybank the first group, Deutsche Bank Securities and Overseas Chinese Banking Corp the second, and Commerce International Merchant Bankers and Bank Pembangunan - were all notified they had been short-listed.

When bankers involved phoned Cagamas to find out their fate, agency officials told them the field had been narrowed down to two. Intriguingly, and surely infuriatingly for the bidders, officials would not disclose which two consortia remain in the running, saying only that a decision was imminent'.

Even after an arranger is selected, bankers familiar with Cagamas believe further delays can be expected if the agency chooses to bring an advisor' on board. That is the approach it took for its first deal last October when boutique firm Bumiwerks Capital Management actually structured the transaction, while Aseambankers and Commerce International Merchant Bankers handled the domestic placement and Standard Chartered led the sale to offshore investors (see ASR 10/18/04).

Should Cagamas go this route, it would bring foreign firms such as Nomura Securities, which is able to do advisory work in Malaysia but does not have an underwriting license, back into play.

(c) 2005 Asset Securitization Report and SourceMedia, Inc. All Rights Reserved.

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