Abu Dhabi’s Ipic to pay interest on 1MDB bonds as Malaysia clears officials

Abu Dhabi government-owned investment firm said it would pay US$102.7 million in interest payments due this month and next month on two $1.75 billion bonds issued by 1MDB units.

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International Petroleum Investment Company will pay interest on two bonds issued by the troubled 1Malaysia Development Bhd (1MDB) as an investigation in the South East Asian nation cleared officials of any wrongdoing.

The Abu Dhabi government-owned investment firm said it would pay US$102.7 million in interest payments due this month and next month on two $1.75 billion bonds issued by 1MDB units – 1MDB Energy and 1MDB Energy (Langat), and co-guaranteed by Ipic.

1MDB is locked in a scandal, amid allegations of graft, that has hurt the reputation of the Malaysian prime minister Najib Razak, who chairs the fund’s advisory board.

1MDB, an economic development fund, has racked up more than $11bn in debt and has sought help from investors such as Ipic to help it restructure the debt.

Ipic agreed in May to grant 1MDB $1bn in cash to settle some debt, assume $3.5bn of debt and forgive an undisclosed sum of debt owed to Ipic by 1MDB, in return for a transfer of assets to Ipic.

Ipic and 1MDB have yet to identify the assets to be transferred to the Abu Dhabi fund. “By 30 June 2016, Ipic is to have received a transfer of assets with an aggregate value of an amount which represents the sum of the cash payment, the assumption of debt and the debt forgiveness,” Ipic said in a statement.

The agreement reached in May “supersedes all previous commercial transactions between the parties”, the statement added, without elaborating. Ipic said it remains committed to working with 1MDB and the Malaysian ministry of finance. The scandal sweeping through 1MDB had led to rumours that Ipic may pull out its support, prompting the Malaysian fund to deny such a move in August.

Meanwhile, the Malaysian attorney general’s office said on Thursday in a central bank investigation that 1MDB officials did not make false statements.

The central bank had submitted a report to the attorney general’s office in August and the report was reviewed by the office, which found that no offence was committed and no further action would be taken, the state-run news agency Bernama reported.

“The investigations conducted by the respective agencies were never at any time halted or hindered,” the attorney general’s office said in a statement carried by Bernama.

The attorney general’s findings come after Malaysia’s rulers demanded that the government wind up investigations into 1MDB as soon as possible, fearing the scandal had affected the country’s economy.

“The findings of the investigation must be reported comprehensively and in a transparent manner so that the people will be convinced of the sincerity of the government which shall not at all conceal facts and the truth,” the rulers said.

“The failure to give convincing clarifications and answers is feared to have resulted in a crisis of confidence. As a consequence, the people believe, whether basing on reality or perception, that this is among the causes for the plunge in the value of the Malaysian ringgit, impacting the country’s financial market and economic climate negatively and at the same time adversely affecting the world’s view of Malaysia.”


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