Deutsche-led group in talks over US$975m 1MDB debt
By Anita Gabriel
May 13 (Business Times) -- Singapore
THE financial plight of the debt-laden 1Malaysia Development Bhd (1MDB) is set to deepen, as jittery lenders of a US$975 million syndicated loan led by Deutsche Bank plan to ask the troubled state-owned firm to pay up before the loan falls due in less than four months.
The Business Times understands that the offshore loan, led by Deutsche Bank Singapore and syndicated to five Gulf banks including Abu Dhabi Commercial Bank, is guaranteed by the Malaysian government.
But the creditor banks have turned panicky - some more than others - as the loan is secured with 1MDB's wholly owned Brazen Sky's US$1.103 billion, which the state-backed firm has said is being kept at Swiss private bank BSI Singapore here.
What seems troubling, sources say, is that the "securitisation document" for the loan has now been deemed "incomplete", as one of the covenants was not fulfilled. This essentially allows lenders to demand payment on the loan anytime before it becomes due at the end of August.
A source said: "What was earlier construed as a tightly collateralised loan is now making the banks nervous, given this controversy."
The worst-case scenario, say market watchers, is that if the lenders declare the loan to be in default, 1MDB could run headlong into a situation of a cross default on the rest of its debts of RM42 billion (S$15.5 billion). This has been a possibility long flagged by naysayers.
For now, the affected parties are believed to be locked in intense negotiations to avert such a crisis involving the loan, which was used by 1MDB to pay Abu Dhabi's International Petroleum Investment Company (IPIC) to terminate an option to subscribe for the future listing of 1MDB's power asset, Edra Energy.
Edra's stock offering has since been delayed, and there is no certainty it will take off as planned.
In a recent report, whistleblower site Sarawak Report alleged that BSI Singapore had informed the Singapore authorities that the documents related to 1MDB's account in BSI were in fact "false bank statements" and "did not represent a true account of the assets of the 1MDB subsidiary". In short, Sarawak Report alleged that there was "no actual cash" in the account, citing "insider information gained in Singapore".
On its part, 1MDB has said that it would not comment on speculation and market rumour.
Contacted for comments on the matter, a spokesman for Deutsche Bank Singapore said that the bank was "unable to assist".
The unfolding of the 1MDB saga highlights the widening reach of the controversy, which has extended to several banks in Singapore, such as BSI, RBS Coutts and now, Deutsche Bank.
The Monetary Authority of Singapore (MAS) has said that it was providing assistance, within the full ambit of its laws, to Malaysian regulators that are probing 1MDB's accounts and business practices.
Industry sources say that some of the banks here, BSI Singapore being one of them, have hired legal representatives in the event the situation turns serious and potential claims are made against them.
A source said: "If things start to develop and no one is sure what the affected parties might do, the banks need to ensure legal representation is in place to defend their position. It's a normal prudent move on their part."
One of BSI Singapore's officers who may have been involved in 1MDB's dealings with the bank has been on "gardening leave", and is believed to have hired lawyers, in case the need arises.
A lawyer said: "MAS is a prudent and diligent regulator and has a lot of power to obtain information from banks very quickly. The question is whether this saga involving banks in Singapore is about lapses in best practices or breaches that are under the jurisdiction of other regulatory bodies such as the CAD (Commercial Affairs Department) and the police."
- Business Times Singapore
- Business Times Singapore
I hope the Malaysian Prime Minister Najib Razak, who is also Finance Minister and Chairman of 1MDB's board of advisors comes up with some believable tales to explain this humiliating piece of news from our southern neighbours.
Najib may also want to tell us the rakyat if the above 'subject' was also part of his recent talks with the still much respected Prime Minister of Singapore.
My simple advice to the Prime Minister before he reads out another consultant/advisor prepared text is... please refer to my previous posting - Yes Prime Minister.
TQ Mr Prime Minister.
p/s Does anybody know the whereabouts of 1MDB's recently minted head-boy Mr Arul Kanda Kandasamy?
There is a limit to what good neightbours can help. Singapore's international reputation is on the line if at any time the international financial markets have the slightest doubt on Singapore banks' adherence and compliance to rules and regulations. The whole financial industry in Singapore will be at stake.
ReplyDeletePlease read this too... https://jebatmustdie.wordpress.com/2015/05/12/umnos-unprincipled-leaders-and-their-followers/
ReplyDeleteDon't worry ,Najib will surely explain everything about 1MDB to all 160 "Ketua Bahagian" and his current cabinet ministers.
ReplyDeleteHe will explain and they all will happily accept it with stronger support.
ReplyDelete3.85 explained yday, the top line is solid and nothing can pull em down...hehehe...another bloody idiot statement by 3.85 graduated at university of kangkung....
ReplyDeleteOoi encik 3.85 bahalol, camna hang kata x leh tumbang klu yg bawah da byk lari dan bergoncang
Hebat sgt ckp psl gst...skrg g ler crita kat johor....
By my consultants I thrive and by my consultants I fall. Ain't I the Prime Minister of yo all? Why so many questions about my doings and undoings? If I say buy, returns will be high! If I say sell, you know I mean well!
ReplyDeleteHehehehe! I'm the Bugis beyond compare maah: Ah Jib Gor! My friend Jholow teach one .... hehehehe
Mana berani ckp byk kt johor..nanti gelaran datuk kena tarik
ReplyDeleteRasanya gelaran Datuk tu bukan dari Johor. Kira tak kena penampar pun da cukup baik
DeleteDulu Kandarsamy CEO 1MDB kata 1MDB akan tutup kedai setelah menyelesai masaalah yang dilanda sekarang. Adakah ini masih dalam perhitungan 1MDB?
ReplyDeleteThe fact that the affected banks in Singapore have already engaged lawyers signals to us that something big will happen soon. Regardless whether the PM explain it or not, this problem is going to blow up big.
ReplyDeleteSdra APANAMA,
ReplyDelete1. I believe that the rescue and bailout of 1MDB is in full swing now.
2. As I have responded to readers of my blog, the question is not whether 1MDB can be saved, but has to be saved.
4. If 1MDB is not saved or rescued, tens of billions of ringgit will be lost, the local financial system would be weakened, the value of ringgit would fall further and we may suffer serious sovereign downgrades.
5. If 1MDB collapses, local banks, government-linked investment companies (GLICs)and institutional investors - local and foreign - could lose tens of billions of ringgit.
6. No matter how much I damned the PM and his "brilliant" corporate strategists for creating this pseudo strategic investment company called 1MDB's, I would not allow it to fail because the cost of its failure is far higher than the cost of saving it.
7. But those responsible for this fiasco must be exposed and made accountable, including being criminally prosecuted.
Wallahuaklam.
Thank you.
Wonder how ALL the UMNO MT and Division Chiefs, without exception, could still swallow all this, and sing along with Najib.
ReplyDeletePerhaps the song was London Bridge is falling down?
Was there any exception?
Dato,i wish to differ. Lets the IMDB failed to enable the Bugis supporter to taste their own medicine!
ReplyDeleteToo bad to the country, but unfortunately that is the price to be paid for having in place an irresposible and incompetent PM!
Otherwise, the Bugis supporter would simply claim victory against Tun M's sincere concerns over 1MDB's real threat to the country's economy!
Disagree with Sdra Kadir Jasin.
ReplyDeleteAgree with ANON 9:08:00
let 1 MDB fall. We must not interfere, otherwise it will be a vicious cycle of pumping money and money and money into a bottomless pit.
Save it for what?
Save it for who?
What business are they in?
They have no business unless you call borrowing money as a business.
Let it fail, the perpetrators must take full responsibility.
Najib is in retaliation mode, all-out. Tun M has been disgracedly humiliated on the pretext of bailing-out his sons businesses. You all should re-group and intensify the efforts.
ReplyDeleteNo..no..no
ReplyDeleteDo not save 1mdb at all cost. Keep that money for the rakyat. And those involved in 1mdb should pay the price...do not involve the innocent rakyat in this fiasco...
i really want to know who approved the billions loan by 1mdb..anyone knows?
ReplyDeletePlease bring that person to court!
Sdr Apanama,
ReplyDeletecan feedback status what our Bank Negara is handling this affair in the midst of Singapore and international banks running scared of 1MDB loans.
I am sure the Singapore regulators and banking authorities must have contacted Zeti's team, exchanged info, documents, and next course of action. In a way BNM is like Interpol, catch the bad guys who are financially scamming the rakyat and BNM.
For me bank kancil is another culprit. Every1 knows money goin out and comin in (if im not mistaken more than rm30k) needs to fill up their form n submit to them. It is a regulation. How money can b transfered worth billions without dem knowing is ridiculous. All banks are regulated.
Delete"That Home of the Hereafter (Paradise), We shall assign to those who rebel not against the truth with pride and oppression in the land, nor do mischief and commit crimes. And the good end is for the Muttaqin (pious and righteous ones)."
ReplyDelete(Quran 28:83)
"Verily, Qarun (Korah) was one of Musa's (Moses) people, who behaved arrogantly towards them. And We gave Qarun the treasures, of which the keys alone would have burdened a body of strong men. Remember when his people said to him: "Do not exult (in your riches, being ungrateful to the Lord). So he went forth among his people in the glitter of his wealth. Those persons whose aim was the life of this world exclaimed: "Oh! if only we had the likes of Qarun's possessions! He is truly a lord of mighty good fortune!"
But those who had been granted wisdom said: "Alas for you! The reward of the Lord is better for those with faith who act righteously - but none shall attain this except for the ones who steadfastly persevere.
Verily, Allah loves not the people who exult(in themselves)! Then We caused the earth to swallow Qarun and his dwelling place." (Quran 28:76-81)
Agree, would be interested to know how our Bank Negara Malaysia is managing the current issues facing 1MDB, especially where the 5 banks are now seeking earlier repayment of their loans, and not only that, seeking legal advice in case of non-payment and the "false" documents allegedly submitted by 1MDB as collateral for the loans.
ReplyDeleteZeti, the ball is now in your court, let's hear from you.
Read this morning the following article, it's good to share and ask :
ReplyDelete"With the controversy over the sale of 1Malaysia Development Berhad's (1MDB) land in the Tun Razak Exchange (TRX) financial district to Lembaga Tabung Haji still raging, a PAS leader has upped the ante by asking who made the decision to sell the land, originally earmarked for Bumiputera, to the state investment vehicle.
PAS central committee member Dr Dzulkefly Ahmad also asked what was the original price of the land in the Kuala Lumpur city centre, which was previously owned by Pelaburan Hartanah Berhad (PHBB).
The land along Jalan Tun Razak was earmarked for Bumiputeras to increase their property ownership during the administration of Prime Minister Datuk Seri Najib Razak's predecessor Tun Abdullah Ahmad Badawi.
"Who was the one who directed and ensured the agenda to sell PHBB trophy asset to 1MDB?" asked the former Kuala Selangor federal lawmaker in an interview with The Malaysian Insider.
"It was said the land was allocated to PHBB during Tun Abdullah's era with the aim of developing it so that Bumiputeras still have an opportunity to invest in prime real estate by way of shares, investments and shariah-compliant Real Estate Investment Trust," he said.
It was reported that 1MDB only paid RM64 psf when it bought the 30ha from Putrajaya four years ago.
- See more at: http://www.themalaysianinsider.com/malaysia/article/who-decided-to-sell-trxs-bumi-land-to-1mdb-asks-pas#sthash.kmcQil7g.dpuf
I agree with Saudara Kadir, 1MDB must be saved. Failure of 1MDB will drag the whole of Malaysia down.
ReplyDeleteWhile bailing out 1MDB, Najib and his family (and all that enjoyed the ill gotten wealth) must be made to pay for the losses. If not via criminal prosecution then via civil suits.
MACC must also investigate Najib and cronies' excessive wealth. Their source of wealth must be clearly explained to the rakyat!!
Anon 12:40 pm: The whole Malaysia is already down. Our currency has really depreciated badly. The worst has already happened.
ReplyDeleteDon't ever dream of any action being taken against a sitting PM. It will never happen in Malaysia.
A failed 1MDB would prove that Tun M was right all the way, and that would also mean that the sitting PM would not have enough "resources" to maintain the "support" from all MT and Divisional Chief.
In short, unfortunately only two failures would bring the current PM down. Either the fall of 1MDB or the fall of the BN government (PRU14)!
There will be no renaissance if 1MDB is artificially supported.
ReplyDeleteLet it die a natural death, and out of the ashes, a better system will rise.
If we always have the fear that something better is not good for us, how will we improve?
This is how and why the current gomen is being preserved, because they scare you by saying, there is no other alternative to UMNO. Garbage in, garbage out.
Saudara Apanama, Tun M has a significant clout among the civil servants. That is really Tun M's strength. I'm sure Tun M knows better on that, and he should fully utilise it.
ReplyDeleteThe fact of the matter, RM (not to be read as Ringgit Malaysia, but referring to the de facto PM) and her unreasonable people at the FLOM office, including another RM (a guy from FLOM office, the newly emerged spokeperson of the de facto PM), are the sources of silent hatred to many civil servants. Pemandu and Idris Jala are of course also on top of their hate lists.
Now, have you realised that there are at least two more RM, other than Ringgit Malaysia:-)
Significant Leader.
ReplyDeletesgx nifty