1MDB's hole is getting bigger and bigger

YOURSAY | ‘Losing RM6 billion before the start of business is a terrible blow.’

How 1MDB lost RM6b through bond mispricing

Vijay47: KINIBIZ seems to suspect that there are deliberate moves by persons in Malaysian financial authorities to engage in transactions outside sensible market ranges.

KINIBIZ, you need not suspect such schemes any more. They are part of established business procedure where related parties can allegedly buy assets at prices way below market value, or sell them at levels high above what the open market would see.

The 1MDB land and the Mara property in Australia are classic examples. So what else is new?

Sali Tambap: What do you call the ‘experts’ who did their job so ‘well’ in 1MDB? At the rate that 1MDB is losing money and selling their assets, I would rather we not have these so-called experts managing what little left we have in this country.

There is a limit to our patience and these experts must have some accountability when things do not go right with the nation's company rather than giving them unlimited carte blanche to manage our wealth.

ACR: If its bonds were rated AAA and issued for five years at a coupon rate of 6 percent when the market yield for similar five-year AAA issues were trading at 4.50 percent, then the case is validated.

But given what has happened to 1MDB, I am sure the market is demanding significantly higher yields vis-a-vis other similar bonds for the perceived risk 1MDB carries.

Any responsible corporate issuer would strive its best to issue a bond at a lower coupon rate to manage its borrowing cost.

Was 1MDB's management lackadaisical or was the need to borrow so great that it was willing to offer a significantly higher rate than the market bearing in mind this is a Finance Ministry-owned entity and should be able negotiate a more competitive borrowing cost.

Dont Just Talk: Losing RM6 billion before the start of business is a terrible blow for any start-up company, including 1MDB.

Those nincompoops responsible for such oversight, intentionally or unintentionally, should be charged in court with breach of fiduciary duties and in China, most probably shot for treason.

Anticonmen: Even in many public companies, fraudsters in control speculate on risky investments and bonds, without approval from shareholders and swipe the shareholders' funds away and give the excuse that the downturn in the market is to be blamed.

We have regulatory authorities who do not impose controls or punish such fraudulent or wrongful trading which is actually, clearly provided for under Sections 304, 306,368,369 of the Companies Act.

QueAnonymous: The business model of 1MDB is based on the concept of ‘fast initial public offering (IPO)’ and not using a lot of government funds.

Currently the indicators were good for the Malaysian economy but “the noise level may not be all that positive about Malaysia”.

Telestai!: Malaysia's US dollar bond pricing used to be very tight so it is fair to say that 100/120 basis points US Treasury bond yields (UST) is easily achievable. What we see in 1MDB is ridiculous if not totally out of whack.

Then again, everything has a price. Normal bond raising takes time to appoint the right arranger and manager, drafting of documents, road shows and book building.

But if you short-circuit everything and in addition get someone like Goldman Sachs to underwrite, you're giving conflicting signals to investors.

Investors will question the urgent need for funds when the country's finances is not in distress. When you can't give a credible answer on the urgency of the funds, investors will either back off or charge a massive premium.

This is exactly how investors treat junk bonds. Besides, the explanation of a ‘fast IPO’ doesn't hold water.

Investors will question how a sovereign fund can add value to the country's economy by getting involved in power assets shuffling.

MariKitaUbah: 1MDB made a blunder, now they are introducing all sorts of taxes to cover the big hole. The rakyat paying through their nose.

Acik: Well, profit is still considered a profit, regardless of how they earn it. By all means, if they manage to get a fair amount of money out of the deal, then so be it.

This should be considered as quite a move by 1MDB when there are tireless people ranting pointlessly on this matter.

Boeyks: I read that these 1MDB borrowings are guaranteed by the government. Since the exposure of the ‘donation’, there seems to be to be no clear explanation about the financial status of 1MDB which I still believe is tied up with the ‘donation’.

There are many cybertroopers trying to confuse the situation and asking for more time, patience, etc. We are just worried that given our patience, we may be taken for a ride whilst the alleged crooks cover up their trail.

Can't one of these high-powered directors or advisers of 1MDB come up and assure us that taxpayers will not have to make us for the losses and whether any of the directors will take care of any shortcoming?

With the Goods and Services Tax (GST), hike in toll charges and subsidy withdrawal these few months, we simply can't afford to pay out any more as we don't receive any Arab-sent donations. -Mkini