1 MDB bonds: Never mind IPIC, trustees of all USD bonds have a duty and likely to pursue 1 MDB, MOF Inc, and the Malaysian Government for full redemption plus interest


by Ganesh Sahathevan

The Malaysian Government seems to have not understood that the trustees of its various bond offerings have a duty to pursue the bond issuer 1 MDB and all other parties related to the issue,including the MOF Inc, the Malaysian Government , the Minister for Finance,the Prime Minister, and all others, whoever they may be. The trustees are not limited to pursuing the guarantors on record, such as IPIC of Abu Dhabi.

Therefore, while it suits the The Bank of New York Mellon , trustee for the
U.S.$1,750,000,000 fixed rate 5.75 per cent. notes due 2022 issued by 1MDB Energy (Langat) Limited to request IPIC as co-guarantor to make good on the default by 1 MDB, it only does so because it is in the best interest of its beneficiaries, the bondholders. It is not relevant to the trustees that IPIC and 1 MDB may be in dispute, and that as a consequence interest payments stalled, delayed or suspended.

Given the continued defaults by the issuer, 1 MDB, the trustees are likely to find themselves in a position where they will have to pursue accelerated redemption ,which is likely to include a demand for future interest payments to be paid in a lump sum.
It is probably for this reason that the Malaysian Government is preparing to consolidate its 1 MDB bonds in order to repay bondholders.

Naturally, this will mean less or even no money left to pay IPIC the USD 1.2 billion and counting that it is owed.

END

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