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Fitch: “No immediate negative impact by 1MDB on sovereign ratings”

Arul Fitch

Zaidi Azmi
Written by Zaidi Azmi

KUALA LUMPUR – April 27, 2016: International rating agency Fitch today announced that the developing situation at 1Malaysia Development Berhad (1MDB) will not have an immediate negative impact on Malaysia’s sovereign ratings.

The Fitch’s announcement was made after 1MDB issued a statement yesterday that it did not pay a USD$50.3 million coupon  on a USD$1.75 billion bond following a stand-off with Abu Dhabi sovereign fund International Petroleum Investment Company (IPIC) , triggering cross defaults on some of its other bonds.

Fitch’s statement today which was quoted by Reuters also stated that there is an increasing likelihood that at least some of 1MDB’s debt will be formally assumed by the Malaysian government, but added that it has long viewed the government-owned investment firm as a close contingent liability of the sovereign.

The rating agency rated Malaysia at ‘A-’ with a stable outlook.

Meanwhile, 1MDB president and group executive director Arul Kanda Kandasamy in a statement today clarified claims alleging that he admitted 1MDB was indeed involved in several financial frauds.

 “I must clarify that I had never “admitted there was fraud” as has been mistakenly alleged by various personalities and subsequently wrongly reported by certain media.

“What I did say is that, given the content of the April 12, 2016 statement by the Office of the Attorney General of Switzerland, 1MDB must now be open to the possibility of fraud, i.e. that it cannot be discounted.

“It is regrettable that various personalities have chosen to ‘spin’ my words to further their own agendas,” he stated.

According to Arul, the more important thing was the 1MDB’s firm contention on the USD$3.5 billion deposits paid to Aabar Investments PJS Ltd (Aabar BVI).

“1MDB maintains that it dealt with senior executives, hence these transactions bind IPIC and Aabar PJS as corporates – bluntly put, it is an internal matter for them to resolve.

“1MDB will not shy away, and looks forward to resolving this dispute with IPIC through discussion and if necessary, arbitration, in order to ensure an expeditious resolution, in the interests of all stakeholders.

“In the meantime, 1MDB will continue to extend full cooperation to the Royal Malaysian Police (PDRM) in its ongoing investigations into the company.”

Arul also stressed that 1MDB has always maintained, and continues to maintain, that if any evidence of wrongdoing is found, then action must be taken, according to the law.

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About the author

Zaidi Azmi

Zaidi Azmi

If Zaidi Azmi isn’t busy finding his way in the city, this 26-year-old northern kampung boy can be found struggling to make sense of the Malaysian political scene. Zaidi can be reached at [email protected]