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1MDB makes payment on dollar bonds, price slumps to record low

Tuesday, March 10, 2015 - 12:32
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1Malaysia Development Bhd, the sovereign investment fund that has struggled to repay loans, said it paid US$66 million of interest on its 2023 dollar bonds yesterday.

[KUALA LUMPUR] 1Malaysia Development Bhd, the sovereign investment fund that has struggled to repay loans, said it paid US$66 million of interest on its 2023 dollar bonds yesterday.

"I can confirm that this payment was made," Arul Kanda, president and group executive director said in an e-mailed statement today.

1MDB's ability to service its debt was put in question after it delayed the settlement of a 2 billion ringgit (S$751 million) loan by about three months. The Kuala Lumpur-based firm, set up by the government five years ago to build infrastructure, has drawn criticism from lawmakers for its rising borrowings, which totaled 41.9 billion ringgit as of March 2014.

The company's US$3 billion of 4.4 per cent notes due 2023 fell 1.7 cents to 83.64 cents on the dollar as of 11:13 am in Hong Kong, a record low, to yield 7.12 per cent, according to prices compiled by Bloomberg. The notes were sold to investors at par, or 100 cents on the dollar, in March 2013.

1MDB, whose advisory board is headed by Prime Minister Najib Razak, announced plans to dismantle its assets in a Feb 18 statement. It won't undertake any new investments or projects, will set up standalone entities for its two major property developments and raise cash from selling its power business over the next 12 months.

BLOOMBERG