RAM Ratings reaffirms AAA/Stable ratings of Cagamas MBS’s CMBS 2005-2, CMBS 2007-1-i and CMBS 2007-2

Published on 13 Jul 2021.

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RAM Ratings has reaffirmed the AAA/Stable ratings of Cagamas MBS Berhad’s residential mortgage-backed securities (CMBS 2005-2, CMBS 2007-1-i and CMBS 2007-2). Cagamas MBS is a limited-purpose entity incorporated to securitise government staff housing loans (GSHL) and government staff Islamic home financing facilities (GSIHF). Repayment of the GSHL and GSIHF stems from non-discretionary direct deductions of civil servant salaries and pensions by Lembaga Pembiayaan Perumahan Sektor Awam (LPPSA). This reduces exposure to the credit risks of the borrowers.

Bond/ Sukuk issue

Outstanding issue amount (RM mil)


OC ratio (%)

CMBS 2005-2



(as at end-June 2020)

CMBS 2007-1-i



(as at end-October 2020)

CMBS 2007-2



(as at end-November 2020)

* OC = Overcollateralisation


The reaffirmation of the ratings of CMBS 2005-2 and CMBS 2007-2 reflects their fully cash-backed position. Accumulated reserves in both transactions are sufficient to cover all outstanding principal and remaining profit obligations up to the maturity of the last maturing tranches in December 2025 (CMBS 2005-2) and August 2027 (CMBS 2007-2). 

The reaffirmation of the CMBS 2007-1-i rating is premised on the transaction’s strong asset cover as seen in an improved OC ratio of 104.34% as at end-October 2020 (end-October 2019: 101.67%). This was driven by the portfolio’s better than assumed loss performance which resulted in faster than expected deleveraging. The available OC affords the transaction strong credit protection against losses arising from default, commensurate with the level assumed under AAA rating stress, and mitigates liquidity risk in a zero prepayment scenario.

To date, LPPSA’s performance as the servicer of the transaction has been satisfactory. While all its staff currently work from home pursuant to Movement Control Order 3.0, we have not observed any material lapses in LPPSA’s servicing quality. The Covid-19 pandemic has not affected the overall performance of the transactions’ underlying portfolios, given that the mortgages had not come under any form of relief. Based on our discussion with LPPSA, the government’s recent move to deduct a portion of civil servant allowances between July and September 2021 for the National Disaster Relief Trust Fund is anticipated to have a negligible impact owing to the marginal deductible amount.


Analytical contacts
Liew Kar Ling
(603) 3385 2586

Tan Han Nee
(603) 3385 2529 


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
© Copyright 2021 by RAM Rating Services Berhad

Rating Rationale: CMBS 2005-2

Rating Rationale: CMBS 2007-1-i

Rating Rationale: CMBS 2007-2

Ratings on Cagamas MBS Berhad CMBS 2005-2