Malaysian state fund 1Malaysia Development Bhd (1MDB) has made interest payments on one of its bond issues this quarter, after failing to pay earlier this year because of a dispute with a guarantor, Malaysia's second finance minister said today.

Abu Dhabi state investment fund International Petroleum Investment Co (IPIC) is seeking about US$6.5 billion from 1MDB and its sole shareholder, the Malaysian finance ministry, alleging that the Malaysian fund defaulted on a 2015 debt restructuring agreement between the companies.

Citing the dispute, 1MDB refused to make the interest payments due earlier this year on two bonds that IPIC had guaranteed as part of the restructuring deal. IPIC then stepped in to make those payments.

This quarter, however, 1MDB made the coupon payments, Malaysian second finance minister Johari Abdul Ghani told Reuters, in what he believed was an attempt to resolve a dispute between 1MDB and IPIC.

"I believe 1MDB and IPIC are trying to find a resolution to their dispute," Johari said, though he did not give further details of the payment.

He said the dispute was a corporate matter and that the managements of the two entities would have to decide how to proceed.

1MDB and IPIC did not immediately respond to Reuters' requests for comment.

At the heart of the dispute between the two companies is a US$3.5 billion payment that 1MDB claims it made to IPIC following the restructuring agreement, but one that IPIC says it never received.

Under a deal signed in 2015, IPIC had agreed to lend US$1 billion to 1MDB and assume payments on US$3.5 billion of its debt.

1MDB is the subject of money-laundering investigations in at least six countries, with the disputed funds transfer to IPIC also under examination.

"If IPIC could just acknowledge that they received the US$3.5 billion payment made to them, then this matter could be easily resolved," Johari said.

He said arbitration talks were still at the "case management stage".

The US Justice Department filed lawsuits in July alleging misappropriation of over US$3.5 billion from 1MDB and that some of those flowed into the accounts of "Malaysian Official 1", whom US and Malaysian officials have identified as Prime Minister Najib Abdul Razak. Najib has denied wrongdoing.

- Reuters