EPF: No notice from trustee on 1MDB bond

PETALING JAYA: The Employees Provident Fund (EPF) has not received any notice from the trustee on its RM200 million subscription of a RM5 billion sukuk (1MDB sukuk) in 1Malaysia Development Bhd (1MDB), despite a cross-default having been triggered.
The cross-default was triggered after the non-payment of the US$1.75 billion (RM6.85 billion) 1MDB Energy (Langat) bond following a dispute with Abu Dhabi’s International Petroleum Investment Company (IPIC). IPIC as guarantor for the bond, has since made the US$50.3 million payment, with plans to claim the said amount from 1MDB and the Ministry of Finance.
“So far we’ve not been given notice by the trustee on the RM5 billion issuance as to whether they’ll be calling a meeting of bondholders, so we just wait and see whether the trustee deems it as cross-default, and whether they need to bring this issue to bondholders,” EPF CEO Datuk Shahril Ridza Ridzuan (pix) told a press conference here yesterday.
Shahril however reiterated that it is not concerned over EPF’s RM200 million bond subscription in 1MDB as the exposure is “very limited” compared with the issuance worth of RM5 billion.
“That exposure is fully government guaranteed, we don’t have a problem with it. In the event of a major problem with 1MDB, the government will step in to cover the debts with all bondholders,” he stressed.
Besides the 1MDB sukuk due 2039 with a coupon rate of 5.75%, the cross-default bonds also involve the RM2.4 billion Bandar Malaysia Sdn Bhd (BMSB) sukuk due between 2012 and 2024.
At the announcement of the cross-default last week 1MDB had said that it had proactively met with and explained the consequences of the IPIC dispute to the Trustees and investors of the 1MDB Sukuk and the BMSB Sukuk.
1MDB had also engaged with Social Security Organisation (Socso) on a RM800 million loan, which was affected by the default, it said.
1MDB stated then, that it trusts that respective parties and the financial markets in general, will understand its unfortunate default as being very specific to its dispute with IPIC and not due to an inability to make payment when due.
The 1MDB sukuk was issued back in 2009 by the Terengganu Investment Authority, which was later rebranded as 1MDB. The proceeds were earmarked for general investments and working capital.