Moody’s assigns Aa3 to 1MDB Energy notes

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PETALING JAYA: Moody’s Investors Service has assigned an Aa3 rating to the US$1.75 billion (RM5.5 billion) notes due in 2022 issued by 1MDB Energy Ltd, a unit of 1Malaysia Development Bhd (IMDB).
The notes are unconditionally and irrevocably guaranteed on a joint and several basis by both 1MDB and International Petroleum Investment Company PJS (Ipic).
1MDB is wholly-owned by the government of Malaysia through the Ministry of Finance. It has been mandated by the government to exercise strategic investment initiatives, with target investment sectors that include energy, real estate, tourism and hospitality as well as agribusiness.
Ipic, which in turn is wholly-owned by the government of Abu Dhabi, is an investment vehicle with international investments predominantly in the petrochemical and refinery industries.
The rating agency said given the strength of the joint and several guarantee with Ipic as one of the two guarantors, Moody’s has extended Ipic’s Aa3 issuer rating to the notes based upon the credit linkage to Ipic.
It noted that the proceeds of the notes will be used to fund the acquisition of an energy company with operating assets predominantly in Malaysia and the Mena (Middle East and North Africa) region.
Recently, 1MDB acquired Tanjong Plc’s power unit Tanjong Energy Holdings Sdn Bhd for RM8.5 billion. Tanjong Energy owns and operates eight power plants in Malaysia, Egypt, Bangladesh, Pakistan, Sri Lanka and the United Arab Emirates. Together, they have a total net generating capacity of 3,951MW.