1MDB's bonds trading at risk premiums of junk bonds
State-owned group needs to show progress in asset sales and avoid fire-sale prices to regain market confidence
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1MALAYSIA Development Bhd's bonds are trading like junk as investors seek greater clarity over the state investment fund's plans to wind down and sell off assets.
Investors are demanding a 441 basis-point premium over similar maturity Treasuries to hold the Kuala Lumpur-based company's securities, compared with an average of 413 for speculative-grade quasi-sovereign notes in the region, a JPMorgan Chase & Co index shows. Its US$3 billion of 4.4 per cent notes due 2023 closed at 86.72 US cents on the dollar on Feb 16, a record low. They fell 0.2 cent to 87.90 US cents on Tuesday.
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