KUALA LUMPUR • Abu Dhabi's International Petroleum Investment Co (Ipic) paid US$52.4 million (S$72 million) of interest due yesterday on 1MDB's 5.99 per cent bonds that it guarantees, according to a filing to the London Stock Exchange.
The move offers 1Malaysia Development Bhd, the troubled state- owned investment firm, some respite after a dispute with Ipic resulted in the Malaysian fund defaulting on a separate note last month.
The 1MDB-Ipic spat is related to an agreement last year in which the Abu Dhabi fund guaranteed US$3.5 billion of 1MDB bonds when they were issued in 2012. Last year, when 1MDB was short on cash, Ipic also agreed to give an emergency US$1 billion loan and make interest payment on the same bonds. But Ipic said last month that 1MDB was in default of the agreement after failing to pay back the loan.
The tussle spilled over to repayments on 1MDB debt, which then led to default by 1MDB on a US$50 million coupon payment on separate privately placed 5.75 per cent bonds. The missed payment hit the reputation of the Malaysian government, which is 1MDB's sole shareholder.
Ipic subsequently made payment on both bonds, and said yesterday it is asking 1MDB and Malaysia for reimbursement on the loan with accrued interest.
1MDB said it had "more than sufficient" funds to make the interest payments on both bonds, but did not, due to its dispute with Ipic.
Mr Luc D'Hooge, an analyst at Vontobel Asset Management, said: "You might find the Ipic-1MDB issues annoying but they are just playing hardball."