by Jake Maxwell Watts
Wall Street Journal
April 19, 2016
The cost of insuring five-year Malaysian government bonds rose to $164.20 on Tuesday
SINGAPORE—The cost of insuring against losses on Malaysian government bonds rose Tuesday on concerns that the national government could be on the hook for billions of dollars of debt owed by state development fund 1Malaysia Development Bhd.
The state fund, which is the focus of corruption probes in at least seven countries, has almost $13 billion in debt it is struggling to repay. 1MDB has denied wrongdoing and says it is cooperating with investigations.
A dispute made public this week between 1MDB and the Abu Dhabi guarantor of some of its debt, International Petroleum Investment Company, has put the future of a debt-workout agreement in doubt and in turn has shaken investors who fear the Malaysian government may need to step in.
The cost of insuring five-year Malaysian government bonds rose to $164.20 on Tuesday, up from $160.18 at Monday’s close and 9.7% more expensive than at Friday’s close before the dispute became public. The bond prices themselves were little changed, with the five-year yield at 3.42% on Tuesday, from 3.41% a day earlier. Continue reading “Cost of Insuring Malaysian Bonds Climbs on 1MDB Worries”