Government will honour all debt obligations

KUALA LUMPUR: Bank Negara Malaysia (BNM) newly appointed governor Datuk Muhammad Ibrahim is confident that the government will honour all its debt obligations.
"The government has issued a statement that it will honour the full commitment and I have no doubt that the government will honour their obligations," he told reporters at the sidelines of the Global Islamic Finance Forum 5.0 today, when asked to comment on sovereign risk from a possible second default by 1Malaysia Development Bhd (1MDB).
"With the resolution of 1MDB, it will improve market sentiment," he added.
Last month, 1MDB defaulted on a US$1.75 billion (RM7.04 billion) bond. The state investment fund is supposed to make an interest payment on a second US$1.75 billion bond it issued, due today.
The second bond carries a US$52.4 million interest payment with a 5.99% coupon rate. The debt was issued by 1MDB Energy Ltd and proceeds were used to fund the purchase of power assets from tycoon T Ananda Krishnan.