Y-Sing Liau
Bloomberg
April 21, 2016
Malaysia paid a bigger premium to bondholders to own some of its new Islamic debt as a delayed interest payment by its troubled state investment fund weighed on demand.
The government priced $1 billion of 10-year notes at a wider spread than an offering a year ago. The sale, which also included $500 million of 30-year notes, drew $6.3 billion of orders, compared with $9 billion for an issuance of the same size in April 2015.
Malaysia warned investors that it faces as much as $4.5 billion in potential liabilities as government investment company 1Malaysia Development Bhd. remains locked in a dispute with Abu Dhabi’s sovereign wealth fund over debt obligations. The disagreement has led to a delay in an interest payment of $50 million on 1MDB bonds, hurting confidence in the sovereign just when the outlook for the oil exporter was improving amid a stabilization in crude and strength in the ringgit.
“The 1MDB risk might have spooked investors’ sentiment this round as it reemerged when the deal was about to close,” said Fakrizzaki Ghazali, a Kuala Lumpur-based strategist at RHB Research Institute Sdn. Continue reading “Malaysia Pays Bigger Premium in Debt Sale as 1MDB Delays Payment”