Malaysia’s 1MDB seeks to reduce surging debt

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mdb1Malaysia Development Bhd, or 1MDB, the country’s sovereign wealth fund whose debt tripled in two years, is considering selling a $461 million sukuk to finance ongoing projects, Bloomberg reported.

The proceeds will be used to finance the relocation of an air-force base in Sungai Besi in Kuala Lumpur. 1MDB agreed to take over the redevelopment of the site from the government in June 2011 on condition it would pay to build a new military air base in the state of Negri Sembilan, located south of the capital.

1MDB is turning to the ringgit-denominated Islamic debt market for only the second time since 2009, after raising $6.5 billion in the past two years through dollar bond sales managed by Goldman Sachs. The sovereign wealth fund came under scrutiny in parliament in July due to its rising debt and for singling out Goldman as the sole arranger, who made about $500 million in commissions and trading gains.

The fund currently has total bonds and loans outstanding of $9.8 billion, according to data compiled by Bloomberg. The company’s most recent annual report shows it had $2.48 billion of debt at the end of March 2012.

1MBD was formerly known as the Terengganu Investment Authority that was created in 2009 to invest oil royalties from the northern state of Terengganu. Prime Minister Najib Razak, who is chairman of the company’s advisory board, changed the name later that year and transformed it to a state-owned enterprise. It now obtains funding from sales of government-backed debt instead of income from oil.

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Reading Time: 1 minute

1Malaysia Development Bhd, or 1MDB, the country’s sovereign wealth fund whose debt tripled in two years, is considering selling a $461 million sukuk to finance ongoing projects, Bloomberg reported.

Reading Time: 1 minute

mdb1Malaysia Development Bhd, or 1MDB, the country’s sovereign wealth fund whose debt tripled in two years, is considering selling a $461 million sukuk to finance ongoing projects, Bloomberg reported.

The proceeds will be used to finance the relocation of an air-force base in Sungai Besi in Kuala Lumpur. 1MDB agreed to take over the redevelopment of the site from the government in June 2011 on condition it would pay to build a new military air base in the state of Negri Sembilan, located south of the capital.

1MDB is turning to the ringgit-denominated Islamic debt market for only the second time since 2009, after raising $6.5 billion in the past two years through dollar bond sales managed by Goldman Sachs. The sovereign wealth fund came under scrutiny in parliament in July due to its rising debt and for singling out Goldman as the sole arranger, who made about $500 million in commissions and trading gains.

The fund currently has total bonds and loans outstanding of $9.8 billion, according to data compiled by Bloomberg. The company’s most recent annual report shows it had $2.48 billion of debt at the end of March 2012.

1MBD was formerly known as the Terengganu Investment Authority that was created in 2009 to invest oil royalties from the northern state of Terengganu. Prime Minister Najib Razak, who is chairman of the company’s advisory board, changed the name later that year and transformed it to a state-owned enterprise. It now obtains funding from sales of government-backed debt instead of income from oil.

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