Abu Dhabi’s sovereign wealth fund said on Monday it will pay bondholders of Malaysia’s troubled investment company should the latter default on an interest payment of US$50 million.
International Petroleum Investment Co, which is the co-guarantor for $1.75 billion of 1Malaysia Development bonds maturing in 2022, said it will pay the coupon if 1MDB fails to do so when the grace period expires Monday, according to a filing to the London Stock Exchange. The payment was due at midnight on April 18 in New York.
The two have been locked in a dispute over 1MDB’s debt obligations to Ipic under an agreement reached in May last year. As part of the pact, the Abu Dhabi wealth fund said then that it would assume obligations to pay interest due under $3.5bn of 1MDB bonds that it guaranteed. Ipic said this month that 1MDB was in default of the agreement after the Malaysian fund failed to pay it more than $1bn in connection with a loan.
That spat spilled over to the interest payment, with each side saying the other should fulfill the obligation. 1MDB president Arul Kanda said last week that while the Malaysian state fund has enough cash to make the payment, it was Ipic that should be doing so under the binding term sheet.
“Ipic has always honored its obligations arising from any agreements it has entered in to and will continue to do so,” the Abu Dhabi company said on Monday. “Any payment in respect of the notes would be made by Ipic in respect of its obligations under the guarantee and not in any capacity under the terms of the binding term sheet.”
business@thenational.ae
Follow The National's Business section on Twitter
