"1MDB's Contractual Dispute With IPIC Is Not Considered A Sovereign Default"-S&P's mind bending statement from last year re-examined
by Ganesh Sahathevan
Readers may recall this statement from S&P issued last year after IPIC declared 1MDB in default of its bond obligations, for which IPIC had provided guarantees on the basis that it would be fully indemnified by the Malaysian Government for any monies paid pursuant to those guarantees. Consequently IPIC announced that it would seek recovery against 1MDB as well as the Malaysian Government, via its Minister of Finance Inc. In a class case of preferring a form of words over legal substance (and I am being charitable in saying so) S&P 's Christian Esters told the Financial Times (UK): “Our sovereign ratings refer to the sovereign’s ability and willingness to service financial obligations to non-official creditors,” said S&P Global Ratings credit analyst Christian Esters. “Consequently, we do not consider a contractual dispute and termination of a bilateral agreement between governments or their entities as sovereign default.” S&P admitted in its own press release (see below) that it formed its opinion without bothering to look at the agreements between IPIC, 1MDB and the Malaysian Government( see bold below).Then again reading the press release below it is also evident that S&P does not quite comprehend that all bonds are in essence contracts which can give rise to "contractual disputes". Meanwhile, as reported on this blog, that "contractual dispute" is growing into a ever larger obligation of the Malaysian Government. See1MDB to be liquidated soon-IPIC has absolutely no reason to accept "China will pay" plan,and rating agencies must now count 1MDB debt as sovereign debt END Malaysia's and 1MDB's Contractual Dispute With IPIC Is Not Considered A Sovereign Default, Says Report DUBAI (S&P Global Ratings) May 10, 2016--In a Credit FAQ published today, S&P Global Ratings explains why it does not view the contractual dispute between International Petroleum Investment Co. (IPIC), 1MDB, and the government of Malaysia as a sovereign default. For the full Credit FAQ, please see "How Does The Call Of IPIC's Guarantee On 1MDB's Bond Relate To Our Ratings On Malaysia And 1MDB's Debt?" Our rating on the 1MDB Energy Ltd. bond is based on what we view as an If you would like to update your information (telephone number, email address, company, etc.) or change the sectors you receive press releases on, please click here. Visit SPRatings.com, a free, interactive, and informative portal to access highlights from our credit research offerings. Consider this your portal to perspective: www.spratings.com |
Copyright © 2016 by Standard & Poor's Financial Services LLC. All rights reserved |
This comment has been removed by a blog administrator.
ReplyDelete