The National Home Mortgage Finance Corporation (NHMFC) plans to do a joint issuance with any of the Asian Secondary Mortgage Market Association (ASMMA) members for multi-currency residential mortgage backed securities (RMBS) targeting ASEAN fixed income investors.
This initiative will pave the way for NHMFC and the Cagamas Berhad, its Malaysian counterpart the plan to set up the first ever ASEAN commingled bond fund.
The NHMFC, for its part, will submit an estimated Php428.5M(USD$ 8.0M) worth of housing receivables for the shared fund.
To ensure a Triple A rating, the bond issuance plans to be guaranteed by the Credit Guarantee and Investment Facility (CGIF). CGIF was established by the ASEAN+3 nations together with the Asian Development Bank (ADB) to provide credit guarantees for local currency denominated bonds issued by investment grade companies in ASEAN+3 countries.
This facility was part of the Asian Bond Markets Initiative (ABMI) to develop efficient andliquid bond markets in the region so that savings in the region can be better utilized to the investment in the region and would also contribute to reduce the risk of maturity and currency mismatches (“double mismatch”) in financing.
The ASEAN commingled bond fund will facilitate greater economic and financial integration in the ASEAN region through the development of an ASEAN fixed income market with harmonious market standards, rules and requirements. Once developed, the ASEAN fixed income market will allow for diversification, as alternative sources of financing will be made available through cross-border capital raising activities.
The wider choice of investment instruments, in addition to lower foreign exchange risk because of the relatively close value of ASEAN currencies, will encourage ASEAN investors to invest in the region allowing for money to circulate within the ASEAN region.
Counterpart agencies in other ASEAN countries would be enjoined to join the initiative during the Asian Secondary Mortgage Market Association meeting on September 29, following NHMFC’s hosting of the 2nd ASEAN Fixed Income Summit on September 28.