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Update: 1MDB makes payment on dollar debt, price drops to record low
[KUALA LUMPUR] 1Malaysia Development Bhd., the state-owned investment firm that has struggled to repay loans, said it paid US$66 million of interest on its 2023 dollar bonds on Monday.
"I can confirm that this payment was made," Arul Kanda, president and group executive director said in an e-mailed statement on Tuesday.
1MDB's ability to service its debt was put in question after it delayed the settlement of a RM2 billion (S$747 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 totalled RM41.9 billion as of March 2014.
The company's US$3 billion of 4.4 per cent notes due 2023 fell 1.5 cents to 83.8 cents on the dollar as of 4:30 pm in Hong Kong, a record low, to yield 7.1 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 has US$975 million of loans due Aug 31 and another US$70 million maturing Sept 14, Bloomberg data show.
1MDB, whose advisory board is headed by Prime Minister Najib Razak, announced plans to dismantle its assets in a statement last month. It won't undertake any new investments or projects, will set up standalone entities for its two major property developments and will raise cash from selling its power business over the next 12 months.
Malaysia's Auditor-General Ambrin Buang promised today to undertake an independent audit of 1MDB that will cover all financial accounts, including previous ones.
"We will call everyone that is involved, including all those making allegations against 1MDB, if necessary," Mr Ambrin told reporters at a media conference in Putrajaya, outside Kuala Lumpur. "If there's a necessity, we'll also call the prime minister."
Mr Ambrin was instructed by Mr Najib to independently verify 1MDB's accounts last week after the state-owned company and its auditor Deloitte LLP met government officials to address media reports about 1MDB and the use of its funds.
According to Kanda, 1MDB has been the target of "politically motivated" attacks that "could potentially harm the economy."