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Malaysia's central bank says confident government will honour debt obligations

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Malaysia's new central bank governor said he was confident the government would honour all its debt obligations, as a deadline loomed on Wednesday for troubled state fund 1MDB to make a coupon payment on a US$1.75 billion bond.

[KUALA LUMPUR] Malaysia's new central bank governor said he was confident the government would honour all its debt obligations, as a deadline loomed on Wednesday for troubled state fund 1MDB to make a coupon payment on a US$1.75 billion bond.

"I'm quite confident the government will honour all of its debt obligations," Muhammad Ibrahim told reporters at the sidelines of an event in Kuala Lumpur. "Also, with the resolution of 1MDB, it will improve market sentiments," he added.

1Malaysia Development Berhad (1MDB) has to make a payment on a US$1.75 billion bond on Wednesday, but there was no indication yet on whether it would be paid.

Last month, 1MDB did not pay a US$50.3 million coupon on another US$1.75 billion bond, following a stand-off with Abu Dhabi sovereign fund IPIC, triggering cross-defaults on some of its other bonds.

REUTERS