Cross default provisions on 1 MDB's Ringgit, but not US bonds? Only Moody's would believe that. Malaysian Government likely facing cross defaults on all if not most of its debt

by Ganesh Sahathevan



...the sovereign wealth fund said that as a result of the default in the Langat notes, cross defaults have been triggered on the RM5bil 1MDB sukuk due 2039 and RM2.4bil Bandar Malaysia sukuk due between 2021 and 2024. “There is no 1MDB cross default on an RM800mil loan from the Social Security Organisation or Socso. “However, there is a possibility that the “material adverse effect” clause may be triggered due to the developments.The 1MDB Sukuk and the Socso loan both benefit from guarantees issued by the Government of Malaysia.

“1MDB confirms that there is no cross default on its other remaining debt, i.e the US$1.75bil fixed rate 5.99% 1MDB Energy Limited notes and the US$3bil fixed rate 4.4% 1MDB Global Investments Ltd notes,” it added.
In other words, lenders for the less risky RInggit loans demanded cross guarantees (except, conveniently ,SOSCO) but the more risky US Dollar loans did not. Only Moody's ,and perhaps S&&P ,would believe this rubbish.
Safe therefore to assume that the Malaysian Government is likely facing cross defaults on all if not most of its debt.
END 

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