Malaysia's secondary mortgage company Cagamas last week priced its third MBS. It was the issuer's second to use a conventional structure following a similar effort in October 2004 and an Islamic deal this July. AmMerchant Bank and Standard Chartered shared lead manager duties on the M$2.06 billion ($530.8 million) transaction, with ECM Libra the financial advisor.
The deal, backed by a M$2.9 billion pool of civil servant housing loans acquired from the government, was split into seven triple-A rated tranches with maturities stretching from three to 20 years.
All tranches finished near the wide range of indicative pricing. The three-year paper pays 4.10%; the five-year 4.44%, seven-year notes offer 4.71%, while the 10-year bonds carry a 5.10% coupon. Additionally, the 12-year tranche offers 5.34%; the 15-year notes finished at 5.65%, while the 20-year piece - a first for Malaysian ABS - offers 5.92%
Spreads over Malaysian treasurys ranged from 55 basis points on the three-year paper to 81 basis points for the 20-year tranche. By pricing at the wider end, Cagamas was again able to attract a sizeable order book, this time worth almost M$12 billion, equal to an oversubscription of 5.8 times.
A banker involved said bids came from both offshore and onshore investors, comprising financial institutions, asset management companies, insurance companies and corporates. With settlement due on Dec. 12, precise allocations details were not available as of press time.
In other Asian government ABS activity, the Bangkok Metropolitan Administration, responsible for infrastructure projects in the capital, is considering securitization as a funding option for 2006. Although largely funded by the Government of Thailand, the agency says state support will not fully cover financing of projects next year, particularly improving water treatment facilities. Securitization might be one way to make up the estimated THB5.5 billion ($133.1 million) shortfall, say senior officials. The BMA has appointed Kasikornbank as its financial advisor, with proposals due early January.
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