Abu Dhabi firm denies RM28 billion IPIC bonds linked to 1MDB

PETALING JAYA: Abu Dhabi’s state-owned Mubadala Investment Company has denied a report in The Straits Times that six bonds totalling US$6.9 billion (RM28.6 billion) that it is assuming from its subsidiary International Petroleum Investment Company (IPIC) are connected to state investment fund 1MDB.

The Edge reported today that Mubadala Investment said this in response to its query after the editor of The Straits Times of Singapore, Warren Fernandez, issued a statement to say the newspaper stood by the reporting of its correspondent Leslie Lopez that 1MDB’s debt obligations could be as high as US$6.9 billion and that Malaysia was not aware of it.

Lopez’s report was based on documents filed to the London Stock Exchange (LSE) on Oct 1 by IPIC to seek the consent of IPIC’s bondholders to agree to a debt transfer to Mubadala Investment and Mubadala Development Company (MDC) in a merger that would see MDC become the issuer of the bonds, while Mubadala Investment becomes the guarantor.

The Edge reported that the six bonds — three in US dollar, two in euro and one in British pound sterling denominations — were worth US$6.89 billion collectively.

Following the report in The Straits Times, Tony Pua, the political secretary to the finance minister, issued a statement criticising the inaccuracy of the ST report.

Fernandez said the ST stood by its reporting which was based on “documents and information from highly places and reliable sources”.

However, The Edge reported, the Mubadala statement contradicted what was reported by the ST.

According to The Edge, Mubadala said: “To clarify, there is currently no debt owed by the 1MDB group to IPIC or the Mubadala group.

“The 1MDB group issued US$3.5 billion of notes to various noteholders for which IPIC has given guarantees to those note holders. As issuer, the 1MDB group has the primary liability to pay the noteholders regular interest coupons and to repay the principal amount at maturity. If the 1MDB group were to default and IPIC made a payment under the guarantees, then the 1MDB group would be required to reimburse IPIC for such payments.

“These two 1MDB notes totalling US$3.5 billion are not the same as any of the US$6.9 billion referred to by The Straits Times, which were issued solely by IPIC and is now guaranteed by Mubadala Investment and have nothing to do with 1MDB.”