Malaysia state fund 1MDB plans to pay $1.5b debt soon

The Pak Banker - - COMPANIES/BOSS -

KUALA LUMPUR: The Malaysian state in­vest­ment com­pany at the cen­ter of mul­ti­ple fi­nan­cial probes said it will re­pay 6 bil­lion ring­git ($1.5 bil­lion) in com­ing weeks as as­set sales give it room to pare down debt.

1Malaysia Devel­op­ment Bhd. won't have any more short-term debt and bank loans af­ter the re­pay­ments, Pres­i­dent Arul Kanda said in an in­ter­view on Wed­nes­day at the fund's head­quar­ters in Kuala Lumpur. It will have a cash sur­plus of at least 2.3 bil­lion ring­git af­ter set­tling the debt, he said. "All the short-term debt, all the bank debt will be re­paid" within the next three weeks, said Kanda, a trained lawyer who has led the fund since Jan­uary 2015. 1MDB an­nounced last week it had set­tled a 700 mil­lion ring­git syn­di­cated term loan.

1MDB's 4.4 per­cent 2023 notes climbed 3.4 cents to 92.79 cents on the dol­lar, a level last seen in April 2015, ac­cord­ing to Bloomberg-com­piled prices. In­vestors would have gained 30 per­cent if they bought the se­cu­ri­ties at their lowest point of 71.6 cents on Oct. 2. The bonds were sold at par of 100 cents in March 2013 in a deal ar­ranged by Gold­man Sachs

Group Inc. and rated at A- or four lev­els above junk by Stan­dard & Poor's. The state-owned com­pany, whose ad­vi­sory board is headed by Prime Min­is­ter Na­jib Razak, has been the sub­ject of over­lap­ping in­ves­ti­ga­tions in Malaysia and coun­tries in­clud­ing Sin­ga­pore and Switzer­land amid al­le­ga­tions of fi­nan­cial ir­reg­u­lar­i­ties. Hav­ing al­most de­faulted on a loan, it an­nounced last year it will trans­fer much of its busi­ness to stand­alone en­ti­ties. 1MDB has con­sis­tently de­nied wrong­do­ing. Set up by the gov­ern­ment in 2009 to build in­fra­struc­ture with bor­rowed money, 1MDB started fac­ing cash flow prob­lems in 2014 af­ter a planned ini­tial pub­lic of­fer­ing of en­ergy unit Edra Global En­ergy faced de­lays amid an un­fa­vor­able mar­ket. 1MDB owed 42 bil­lion ring­git as of March 2014.

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