Islamic finance deal of the year: Cagamas IRMBS R$2.05 billion sukuk musharakah
The Cagamas R$2.05 billion ($542.5 million) Islamic residential mortgage backed sukuk (IRMBS) Musharakah, the world’s first rated IRMBS, brought a new asset class to Islamic finance. Cagamas MBS Berhad (CMBS), a single purpose and wholly owned subsidiary of Malaysia’s national mortgage corporation, appointed CIMB, HSBC Amanah, ABN Amro and AmMerchant as joint lead managers for the August 2005 deal.
The transaction involved the acquisition by CMBS, on a non-recourse basis, of a portfolio of loans originated by the government of Malaysia under its staff Islamic homes financing programme. The securitization was structured using the musharakah concept, in which the IRMBS are trust certificates issued by CMBS as wakeel (trustee) under a musharakah declaration of trust to the investors. As the world’s first rated IRMBS, the deal introduced a new asset class to the global Islamic market.
It was the second issuance of asset-backed securities by CMBS and the first issuance of Islamic securities backed by a pool of government staff Islamic home financing. Malaysia’s involvement demonstrated its commitment to broadening and deepening domestic Islamic capital markets. The transaction also created a reference yield curve for the issuance of similar long-term Islamic asset-backed securities.