KUALA LUMPUR (Aug 3): Second Finance Minister Johari Abdul Ghani has denied that the Government is raising RM2.5 billion through murabahah bonds to enable 1MDB to settle its debt with Abu Dhabi's International Petroleum Investment Company (IPIC).

He told Malaysiakini that such suggestions were "totally baseless".

Yesterday, social media was buzzing with talk that the Government was issuing murabahah bonds to raise RM2.5 billion to settle 1MDB's debt.

On Bank Negara's website, it was revealed that the murabahah bond will be issued on Aug 4 and mature on Aug 4 2037. The coupon rate was not known.

Netizens had asked whether it was a coincidence that the bond was issued just before the final deadline for 1MDB to settle its US$602 million (RM2.57 billion) debt to IPIC. The original deadline was July 31 and the bond's opening date was Aug 1.

IPIC had given 1MDB another five days to settle the debt.

Johari told Malaysiakini: "That bond has nothing to do with 1MDB. It is a normal government bond. Every year, we have a deficit budget and we need to finance government expenditure through bond issuance. That's it.

"So whoever who speculated that this bond will be issued to help 1MDB is making totally baseless allegations and they are factually wrong."

He said that the Goverment would issue bonds from time to time and stressed that 1MDB did not seek government assistance over the matter.

"For 2017, we have a three percent deficit... The government will raise money as and when we need it. It is normal for a government to be in a deficit position."

In a statement yesterday, 1MDB had said all payments to IPIC will be from proceeds of its 'rationalisation' plan.

The company said its funds will only be available in August due to the need for additional regulatory approvals and had asked IPIC for the deadline to be extended to August.

Yesterday, Prime Minister Najib Abdul Razak had said in Parliament that missing the July 31 deadline was a technical matter and 1MDB was capable of paying IPIC.