Hornbill Unleashed

August 2, 2017

1MDB gets new deadline for IPIC payment

Filed under: Politics — Hornbill Unleashed @ 8:02 AM

ipic-1mdb-3Abu Dhabi’s sovereign wealth fund has given 1MDB five days to make a US$600 million payment, which it failed to pay today, further complicating a dispute hanging over Southeast Asia’s third-biggest economy.

The 1MDB fund said in a statement it was committed to meeting its obligations to Abu Dhabi’s International Petroleum Investment Company (IPIC), originally due on July 31, in August 2017. It did not specify a date in August.

It said all payments to IPIC would be made from the proceeds of the 1MDB rationalisation plan, under which it is selling assets. It said the delay was also due to the need to get more “regulatory approvals”.

But Mubadala, which now owns IPIC, said in a separate statement today that 1MDB and the Malaysian finance ministry (MoF) have just five days to resolve the non-payment.

“Under the settlement, there is a five business day cure period for MoF Inc and 1MDB to remedy their non-payment before MoF Inc and 1MDB become subject to additional obligations to IPIC and Aabar,” Mubadala said.

Malaysia dissolved 1MDB’s advisory board last year, and its assets were either shifted to the government or sold off as part of the rationalisation programme, after the fund was linked to a multi-billion dollar global money laundering scandal.

Bandar Malaysia sale

One such asset sale – a US$1.7 billion Bandar Malaysia property deal that was executed as part of the rationalisation plan – collapsed in May.

As part of the agreement with IPIC, 1MDB was to pay US$1.2 billion in two instalments. A second payment is due by the end of this year. 1MDB and Malaysia’s finance ministry will also assume responsibility for all future interest and principal payments under two bonds worth US$3.5 billion in total.

The agreement was reached after the Malaysian fund defaulted on its bonds in 2016, sparking a dispute with IPIC, which asked a London court to arbitrate a claim totalling some US$6.5 billion.

IPIC was merged with Mubadala earlier this year.

Bonds linked to 1MDB remained largely unmoved today.

1MDB’s 4.4% bonds due 2023 were trading slightly weaker at 91/93 while the bonds due 2022 were down half a point at 108.3/108.9 cents on the dollar.

“Despite the various guarantees and debt consolidation plans there is 1MDB debt outstanding, and the debt still presents a contagion risk to the government,” said Moody’s analyst Christian de Guzman.

“We don’t have a clear picture of what the liability structure looks like but it is much smaller than the last publicly disclosed level of 4% of GDP in 2014,” he said.

Ratings impact

1MDB, founded by Prime Minister Najib Razak, is the subject of money-laundering investigations in at least six countries, including the United States, Switzerland and Singapore.

In civil lawsuits, the US Justice Department alleged that about US$4.5 billion was misappropriated from 1MDB.

1MDB has denied any wrongdoing and Najib has denied all allegations of corruption against him.

“We do not expect this bilateral dispute to impact Malaysia’s sovereign ratings at this point,” said S&P Global Ratings analyst YeeFarn Phua.

“That said, failure to reach a settlement between 1MDB and IPIC would increase the possibility of these contingent liabilities crystalising on the Malaysia government’s balance-sheet. Should that happen, it will worsen Malaysia’s fiscal metrics.”

Najib faced the biggest challenge to his leadership in 2015 after allegations that hundreds of millions of dollars was misappropriated from 1MDB.

He has resisted all calls to step down over the past two years, and is widely seen to have averted the crisis, as he prepares to call early elections this year for a fresh mandate.

Source : FMT Online by Reuters




  1. 1MDB is 100% controlled by the government and government should take initiative to find out and help and to avoid the image of Malaysia being tarnished. Btw, the top officials of 1MDB are appointed by government, do you expect them to do miracle without higher authority’s green light. We rakyat are not stupid, we just to know the truth of everything. It means nothing to hide.

    Comment by Joe — August 2, 2017 @ 1:45 PM | Reply

  2. Malaysians taxpayers and voters must be fully aware that 1MDB has to pay up to IPIC despite lying that they had in the past already made payment to Aabar PJS Ltd (BVI) which was a fake company cr created by Jho Low and gangs with the full knowledge and endorsement of Najib who was the executive chairman of 1MDB and Finance Minister.

    The issues surrounding 1MDB and SRC International were never about investment losses or forex losses. It was solely about money siphoned out and stolen by Jho Low, Riza Aziz and Najib Razak assisted by Khadem AL Qubaisi, Muhammed AL Husseiny, Jasmine Loo Ai Swan, Casey Tang and Datuk Shahrol.

    Hadi Awang who boasted PAS upheld Islam actually succumbed to Najib’s RM 90 million gift stolen from 1MDB and SRC International. PAS led by Hadi Awang is now beholden to Najib despite undisputed evidence against 1MDB for violating international financial laws in laundering stolen money masterminded by Jho Low and Najib.

    Comment by Mata Kuching — August 2, 2017 @ 1:05 PM | Reply

  3. The day Najib agreed to pay IPIC instead of letting the arbitration process run its course for the money which went to the bogus Aabar BVI company, it was the day 1MDB lost. You can continue to dish out “evidences” but damage is done. Whatever “technical” excuses given, if 1MDB doesn’t pay up, it will continue to accumulate interests on the money owed. IPIC also have the option of filing bankruptcy charges against 1MDB. Right now IPIC is happily letting the interests ballooned. Whatever way you look at it 1MDB has lost the war. But good try though in trying to convince us.

    Comment by Hattan — August 2, 2017 @ 12:45 PM | Reply

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