RAM Ratings reaffirms AAA/Stable rating of Cagamas MBS’s CMBS 2005-2

Published on 17 Jun 2020.

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RAM Ratings has reaffirmed the AAA/Stable rating of Cagamas MBS Berhad’s RM2.06 bil residential mortgage-backed securities (CMBS 2005-2). Cagamas MBS is a limited-purpose entity incorporated for the purpose of securitising government staff housing loans (GSHLs) and government staff Islamic home financing facilities. The repayment of the GSHLs stems from non-discretionary direct deductions of civil servant salaries and pensions, which reduce exposure to the borrowers’ credit risks.

The rating reaffirmation reflects the fully cash-collateralised position of the outstanding RM650 mil CMBS 2005-2 as at end-March 2019. The transaction’s cash balance and permitted investments, totalling RM820.03 mil as at the same date, were more than sufficient to meet the remaining principal repayment and ongoing interest obligations up to the maturity date. This is attributable to the portfolio’s better than expected loss performance, which has helped the accumulation of cash reserves. 

Lembaga Pembiayaan Perumahan Sektor Awam (LPPSA) – the servicer of the portfolio – announced on 8 April that it would not grant borrowers any financing moratorium, notwithstanding the six-month deferment of loan payments offered by banks to individuals and SMEs to minimise Covid-19-induced disruptions. We also understand that LPPSA has not allowed any request from borrowers to defer or restructure financing to date. Nevertheless, any form of relief, if granted, would not affect the transaction given that it is fully cash-backed. Similarly, the transaction’s current position will safeguard it against administrative delays in deductions, if any, in the event of higher incidences of transfers due to the reshuffling and reassignment of civil servants under the new administration. 


Analytical contact
William Tan
(603) 3385 2530

Media contact
Padthma Subbiah
(603) 3385 2577


The credit rating is not a recommendation to purchase, sell or hold a security, inasmuch as it does not comment on the security’s market price or its suitability for a particular investor, nor does it involve any audit by RAM Ratings. The credit rating also does not reflect the legality and enforceability of financial obligations.

RAM Ratings receives compensation for its rating services, normally paid by the issuers of such securities or the rated entity, and sometimes third parties participating in marketing the securities, insurers, guarantors, other obligors, underwriters, etc. The receipt of this compensation has no influence on RAM Ratings’ credit opinions or other analytical processes. In all instances, RAM Ratings is committed to preserving the objectivity, integrity and independence of its ratings. Rating fees are communicated to clients prior to the issuance of rating opinions. While RAM Ratings reserves the right to disseminate the ratings, it receives no payment for doing so, except for subscriptions to its publications.

Similarly, the disclaimers above also apply to RAM Ratings’ credit-related analyses and commentaries, where relevant.

Published by RAM Rating Services Berhad
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Ratings on Cagamas MBS Berhad CMBS 2005-2