(May 14): Syarikat Takaful Malaysia Berhad (Takaful Malaysia) today revealed that it bought a RM85 million Islamic bond from 1Malaysia Development Berhad (1MDB) in 2009, but the Islamic insurance company assured that the investment was low-risk.

Takaful Malaysia group managing director Datuk Seri Mohamed Hassan Md Kamil said the bond was purchased from Terengganu Investment Authority (TIA), which was 1MDB's previous incarnation.

"The bond was purchased in 2009 at a coupon rate of 5.25% which will mature in 2039. It is guaranteed by the government, we believe it's quite safe," he said after attending the BIMB Holdings Berhad annual general meeting today.

BIMB Holdings has a 60.31% equity in Takaful Malaysia.

Hassan said the sukuk only represented about 2% to 3% of its total asset base of RM7.1 billion, which he described as a "very small exposure" to the company's balance sheet.

He said 1MDB had yet to redeem the bond.

"The reason we bought the bond at that time was because of its 30-year tenure. As you know, maturity like this is long term and we are required to match our assets and sukuk was the only issue at that time with such a long time," he added.

Criticism has been mounting over the Finance Ministry wholly owned investment vehicle, established in 2009, which has chalked up debts of up to RM42 billion.

Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah previously disclosed that Putrajaya had  approved an RM950 million standby credit facility for 1MDB, of which RM600 million has been used.

Scrutiny has grown more intense following Sarawak Report's recent exposes, which piled pressure on Prime Minister Datuk Seri Najib Razak and prompted opposition politicians, former Umno leaders and anti-graft bodies to demand a thorough investigation into the fund.

Singapore's Business Times reported yesterday that the six "jittery lenders" had turned "panicky" as the loan was secured by 1MDB's wholly owned Brazen Sky's US$1.103 billion – money which is currently being parked at Swiss private bank BSI Singapore bank.

The business daily, in quoting sources, said "securitisation document" for the loan was now deemed "incomplete", as one of the covenants was not fulfilled.
These meant lenders could demand for repayment from the state investment vehicle any time before its due date of end-August.

"What was earlier construed as a tightly collateralised loan is now making the banks nervous, given this controversy," the daily quoted an unnamed source as saying.

On Wednesday, PKR lawmaker Pandan MP Rafiz Ramli had also revealed he had received information that the troubled state investment vehicle had listed its “questionable” account in BSI Bank Singapore as collateral.

He said if this was true, 1MDB may have to resort to using public funds to meet the September payment deadline, since its account in BSI Bank reportedly had no actual cash.

On April 22, whistleblower Sarawak Report said 1MDB’s account in BSI Bank merely contained  “paper assets”, the “true value of which cannot be determined”.

“A loan as big as this would most definitely have collateral. The information I received is that the  collateral for this loan is the funds in the BSI Singapore account, which was reported as being non-existent,” he said. – The Malaysian Insider