‘No doomsday scenario’: 1MDB president allays debt fears, reiterates US$550m balance and ‘sound’ plan to meet obligations
Arul Kanda Kandasamy assures that the scandal-hit fund has enough cash and a sound plan to meet debt obligations
The president of 1Malaysia Development Berhad (1MDB) has played down concerns of a debt “doomsday” for the scandal-plagued state fund, boasting of its liquidity and US$550 million bank balance after it defaulted this week on a US$1.75 billion bond.
1MDB, already the target of global investigations into allegations of money laundering and embezzlement, withheld a US$50 million interest payment amid a wider dispute with Abu Dhabi’s International Petroleum Investment Co (IPIC), the co-guarantor of the bonds which were purchased last year as part of 1MDB’s debt restructuring plan. IPIC said it would make the interest payments after 1MDB defaulted.
The missed payment triggered cross defaults on US$1.9 billion of 1MDB debt, including borrowings that are guaranteed by the Malaysian government, which owns the fund.
“We don’t foresee a doomsday scenario, as has been trumpeted by certain political opportunists,” 1MDB president Arul Kanda Kandasamy told the South China Morning Post, insisting 1MDB had enough cash to meet its debt obligations. “We believe with the resolution and with our rationalisation plan, we will be able to mitigate and minimise the impact on the government.”
Malaysia’s opposition has argued that the “1MDB house of cards has all but collapsed” and Moody’s Investors Service has warned that failure by 1MDB to pay the US$50.3 million interest could negatively impact Malaysia’s balance sheet.