Hornbill Unleashed

April 27, 2017

1MDB-IPIC deal does little to alleviate uncertainties in Malaysia

Filed under: Politics — Hornbill Unleashed @ 8:01 AM

Christian-de-Guzman-moodyMalaysian state fund 1MDB’s agreement to resolve a debt dispute with Abu Dhabi’s International Petroleum Investment Co (IPIC) may lift market sentiment, but uncertainty on how it will settle bond payments poses a lingering risk, Moody’s said on Wednesday.

1Malaysia Development Berhad (1MDB) and IPIC struck a conditional deal on Monday, under which 1MDB agreed to pay US$1.2 billion.

IPIC had guaranteed bonds issued by 1MDB. Now the fund and the Ministry of Finance Incorporated agreed with IPIC to assume responsibility for all future interest and principal payments for two bonds worth US$3.5 billion in total.

“It doesn’t really change our picture – it’s neither credit positive nor credit negative,” Christian de Guzman, a Singapore-based senior credit officer at Moody’s Investors Service told reporters at a Moody’s event in Kuala Lumpur.

“I don’t think it’s a material development in terms of resolving the entire issue. The bonds continue to be outstanding, so as long as the bonds are outstanding there will be contingent risks to the Malaysian government,” he added.

A government spokesman said: “1MDB will meet all of its debt obligations on the US$3.5 billion bonds.”

De Guzman said there was still a lack of clarity on where 1MDB would source the funds to foot the bond payments, and there continued to be sums that could be due to the government.

“There are questions regarding whether these funds are due from Ministry of Finance Incorporated or will it come from the government. But as we understand, it may be very difficult for budgetary resources to be used for 1MDB,” de Guzman added.

However, he noted that there had been developments related to 1MDB’s debt consolidation plan, and so the risks had receded over time.

Financial transactions by the Malaysian state fund are the subject of money-laundering investigations in at least six countries, including Switzerland and Singapore.

Prime Minister Najib Razak was chairman of the fund’s advisory board.

1MDB has denied any wrongdoing.

The fund defaulted on its bonds a year ago, sparking the dispute, with IPIC asking a London court to arbitrate over a claim totalling some US$6.5 billion.

Opposition leaders have criticised the settlement.


Source :   @ Reuters


 

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1 Comment »

  1. The IPIC and 1MDB financial settlement has not only exposed a big time fraud but also confirmed Tony Pua ‘s assertion that 1MDB had knowingly paid USD 3.5 billion to a fake company in British Virgin Islands which bears a similar name to Aabar Investments PJS, a subsidiary of IPIC. The joint investigation by the former AG, BNM governor, MACC and the IGP did conclude that all the key management officers of 1MDB, SRC International and MO1 were directly involved in Malaysia ‘s biggest financial scandal and money laundering but MO1 had abused his authority to remove the former AG and MACC chief and several high ranking officers. The current BNM governor has also conspired with MO1 and 1MDB and SRC International by absolving senior management staffs of 1MDB and SRC International by declaring that the culprits were no longer on the wanted list of fugitives of BNM. The stolen money paid to a fake Aabar Investments PJS Ltd in BVI could not be recovered .but had been distributed to all the crooks involved.

    Comment by Mata Kuching — April 27, 2017 @ 4:57 PM | Reply


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