1MDB's US$3bil notes receive 'A-' rating

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Standard and Poor’s Ratings Services (S&P) assigned its ‘A-’ issue rating to the US$3 billion notes - due 2023 - issued by 1MDB Global Investments Ltd (1MDB GI), a wholly-owned subsidiary of government investment fund 1Malaysia Development Bhd (1MDB).

It also assigned an ‘axAAA’ Association of South-East Asian Nation Countries (Asean) regional scale rating on the notes.

The rating on the notes facility is equal to the long-term foreign currency sovereign credit rating on Malaysia, based on the expected timely financial support from the Malaysian government, S&P said in a press release.

This confirms a Bloomberg report last month that 1MDB had raised US$3 billion (RM9.3 billion) in debt papers.

This is on top of the RM5 billion bonds it issued in May 2009 and US$1.75 billion (RM5.4 billion) issued in May 2012, thus making a total of nearly RM20 billion.

KiniBiz has previously ran a series of articles on 1MDB, including the possible mispricing of bonds earlier.

1MDB GI is a special-purpose company established by 1MDB in the British Virgin Islands to issue the notes.

1MDB and the government will be supporting the payments when the notes mature, S&P said.

The rating on the proposed notes is equal with that of Malaysia to reflect Standard & Poor’s view of the strength of documentation supporting the transaction and the country’s willingness to support the payment obligations of 1MDB GI under the notes.

The government’s intention to financially support the payments of the notes has been expressed in a letter of support.

The letter constitutes legally enforceable obligations of the government to ensure full and timely payments by the issuer under the notes.


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