Thursday 28 Mar 2024
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KUALA LUMPUR (April 29): Following 1Malaysia Development Bhd’s (1MDB) default on its bond, International Petroleum Investment Co (IPIC) today honoured its obligation as a guarantor by paying the US$50.31 million (RM196 million) interest that was due on April 18. 

The Abu Dhabi sovereign fund said it will now write to 1MDB and Malaysia’s Minister of Finance, Inc (MoF) for repayment of the amount. 

In a filing with the London Stock Exchange, IPIC said it has today made full payment of the interest in respect of the US$1.75 billion fixed rate 5.75% notes due 2022 issued by 1MDB Energy (Langat) Limited and guaranteed by 1MDB. 

“IPIC has made such payment out of existing liquidity and pursuant to its obligations under the guarantee of the notes,” it said.

The Abu Dhabi fund added that following the 1MDB default, IPIC will make a written demand in respect of its indemnity for repayment of the interest payment from MoF and 1MDB “pursuant to the terms of the binding term sheet”. 

On Tuesday, 1MDB confirmed it has defaulted the interest payment for the 1MDB RM5 billion Sukuk due 2039 (1MDB Sukuk) and the RM2.4 billion Bandar Malaysia Sdn Bhd Sukuk, due between 2021 and 2024 (BMSB Sukuk). 

The defaults raised concerns over the sovereignty rating of Malaysia. Moody’s investors service has said this has increased the probability that contingent liabilities, particularly through cross-defaults and an associated indemnity, will crystallize on Malaysia's government balance sheet, a credit negative for the sovereign. 

Meanwhile, rating agency Fitch did not expect the developing situation in 1MDB to have an immediate negative impact on Malaysia's ratings.

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