Rating agency Fitch said today it does not expect that the developing situation at 1Malaysia Development Bhd (1MDB) will have an immediate negative impact on Malaysia's sovereign ratings.

The statement came after 1MDB said yesterday that it did not pay a US$50.3 million coupon on a US$1.75 billion bond following a stand-off with Abu Dhabi sovereign fund IPIC, triggering cross defaults on some of its other bonds.

Fitch said it believes there is an increasing likelihood that at least some of 1MDB's debt will be formally assumed by the Malaysian government, but added it has long viewed 1MDB as a close contingent liability of the sovereign.

Fitch rates Malaysia at 'A-' with a stable outlook.

- Reuters