1MDB Malaysia needs to improve disclosure on 1MDB's debt, CIMB says

[KUALA LUMPUR] Malaysia needs to disclose more information about the debts of state-owned investment company 1Malaysia Development Bhd to reassure investors in the nation's currency and stock markets, CIMB Group Holdings Bhd's chairman said.

While 1MDB's debt doesn't pose a risk for the country's banking system, concerns about the company have unsettled Malaysian financial markets, Nazir Razak told reporters on Tuesday. CIMB is the nation's second-largest bank by assets.

"The reality of the problem is if you keep it hanging there, nobody is really sure of the full ramification," Mr Nazir said. "When people don't know, they expect worse and worse, and I think that's where we are today." 1MDB missed a loan repayment in November after amassing borrowings that amounted to 41.9 billion ringgit (S$15.6 billion) as of March 2014, equivalent to 3.8 per cent of Malaysia's gross domestic product. It eventually settled the loan repayment in February.

The government ordered the country's Auditor General in March to verify 1MDB's accounts and has said that the law will be enforced "without exception" if any wrongdoing is uncovered.

Worries about 1MDB have contributed to the ringgit's 8.2 per cent decline against the US dollar over the past six months. The Malaysian currency was the second-worst performer among Asia's 11 most-traded currencies, according to data compiled by Bloomberg.

The Malaysian government provided 1MDB with a 950 million ringgit credit facility in March, and is now seeking to wind down the fund, which is chaired by the country's Prime Minister Najib Razak, Mr Nazir's brother.

1MDB accumulated its debts with land purchases and the acquisition of power plants in Malaysia and Egypt. It has the equivalent of about US$1 billion of bonds and loans due this year and approximately US$250 million that needs to be repaid in 2016, data compiled by Bloomberg show.

BLOOMBERG