Tuesday, 11 November 2014

Malaysia's Cagamas adds amortisation to bond, sukuk programme


The Edge 10 Nov 2014

Cagamas's mandate as the national mortgage corporation and the leading issuer of AAA debt securities in Malaysia is to facilitate home ownership but, is also exploring ways to develop a deeper and more liquid domestic bond market.

Definition: An amortising bond is structured in a way that gradually reduces the value of the bond over a fixed period of time, meaning the borrower pays off the full amount before the final maturity date.

Amortising bonds are commonplace, but the format is rare for sukuk. Last year, Dubai's Emirates airline launched the first such sukuk in the international market, a 10-year $1 billion deal with an average weighted life of five years.

This would not affect the programme's AAA credit rating from RAM Rating Services, the company added.

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