Cagamas: A Financial Intermediary in Malaysia’s Bond and Sukuk Market

Cagamas is among the biggest issuer in Malaysia’s debt market with RM 339.5 billion of bonds and sukuk cumulatively issued as of December 2020. Cagamas was created in 1987 as the National Mortgage Corporation Malaysia, with a mandate to promote home ownership and growth of the secondary mortgage market. You can learn more about Cagamas here.

Cagamas Roles in Malaysia’s Financial Market

Cagamas plays an integral role in Malaysia’s financial market by providing liquidity to the secondary mortgage market.

Before Cagamas was established, financial institutions such as commercial banks were facing a tight liquidity and constraint to meet the excess demand for housing loans. Banks depend on their deposit base as the primary source of cash to lend to borrowers. If the deposit base is small, then the capacity to give out the loan is also limited. The bank’s liquidity can be assessed with its loan to deposit ratio, with the higher ratio indicates low liquidity. In 1986, a year before Cagamas was founded, the loan to deposit ratio of financial institutions in Malaysia was at 98.0%.

How Cagamas Provides Liquidity to The Secondary Mortgage Market

The last traded yield chart since inception for Cagamas MTN 4.30% 17.11.2023

More Information on Sustainable and Responsible Investment in Malaysia

• Cagamas. (2013, November 13). Evolution of Cagamas. Retrieved from https://www.cagamas.com.my/sites/default/files/content/article/2020-11/evolution.pdf

• Cagamas. Retrieved from https://www.cagamas.com.my/

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