1 Malaysia's Dumb Bodohs

Did you all read the latest WSJ expose ? If you havent here is the link.

Malaysia’s 1MDB and Abu Dhabi Feud Over Coming Bond Payment 

Here is a gist :

 

default could further undermine investor confidence in Malaysia
 

By BRADLEY HOPE and  TOM WRIGHT
 

dispute between M'sia and Abu Dhabi over missing billions coming to a head 

could roil currency and bond markets this week.

feuding over who must make $50 million bond payment due Monday. 

Each saying the other failed to meet its obligations and is refusing to pay

potentially setting off chain reaction leading to billions of dollars of bond defaults.

dispute latest chapter in scandal involving 1MDB

under investigation in seven countries, including Malaysia. 

Swiss AG investigating possible misappropriations of about US$4 billion.

IPIC, guaranteed US$3.5b of 1MDB’s bonds issued in 2012. 

IPIC also gave emergency billion-dollar loan and make interest payments on bonds. 

In return for IPIC taking over the debt, 1MDB agreed to transfer assets to the Abu Dhabi fund.
negotiations broken down recently. 

IPIC officially said money sent by 1MDB to the Abu Dhabi fund as payment for the bond guarantee was never received. 

1MDB sent memo to MOF last week 

memo reviewed by the Wall Street Journal

IPIC told 1MDB it wouldn't be making interest payment US$50m on Monday

1MDB/MOF owe US$6.5b to lenders, includes US$3.5b principal, interest said memo.

Cross-default clauses also likely triggered

putting 1MDB in default on several billion more according to memo viewed by WSJ 

IPIC could also face difficulties with its own bonds

IPIC’s decision to publicly say it didn’t receive money from 1MDB for the bond guarantees means the debt agreement between 1MDB and IPIC is no longer feasible, the memo added.
The memo said that IPIC also believes the Malaysian fund still hasn't given it the assets it promised in exchange for IPIC to make the bond payments.

1MDB did try to transfer fund units 

IPIC has refused to accept anything but cash, added the memo.

1MDB preparing for default, according to memo reviewed by Journal. 

already hired law firm and investigative firm to assist it with a restructuring

1MDB sought permission from Najib to decide what to do memo added

(Sadly the memo did not say that 'garu teloq' is not an option')

unraveling of relationship between Malaysia and UAE 

Besides guaranteeing 1MDB bonds

Abu Dhabi agreed to pay for half of US$6b real-estate project 

project never got off ground and Abu Dhabi never sent any money.

dispute between two funds brewing for months as 1MDB scandal grew. 

Abu Dhabi removed from office two men who ran IPIC 

“Aabar Investments PJS Ltd” was not an entity within either corporate group.

WSJ earlier reported 1MDB fund sent US$2.4 billion to imitation Aabar 

report by PAC put amount transferred to imitation Aabar at US$3.5 billion. 

US$681 million of this money flowed via circuitous route into private account of Najib

Bradley Hope at bradley.hope@wsj.com 

Tom Wright at tom.wright@wsj.com

My comments :

Now here is the dumb bodoh part

IPIC guaranteed US$3.5b of 1MDB’s bonds issued in 2012.

IPIC officially said money sent by 1MDB to the Abu Dhabi fund as payment for the bond guarantee was never received. 

IPIC’s decision to publicly say it didn’t receive money from 1MDB for the bond guaranteesmeans the debt agreement between 1MDB and IPIC is no longer feasible, the memo added.

Folks, we had to pay the Arabs with our taxpayers money for them to guarantee us  ! ! !

What kind of dumb a$$ busness model is this?

It went like this : 

Brader Abdooooool Azeeeeez Maaaaaaajid  please provide us a guarantee for RM14 BILLION RINGGIT (US$3.5b).  

We will cover your guarantee with RM14 BILLION RINGGIT CASH.   

If you had RM14 Billion cash why the hell would you need some far away Arabs to guarantee a loan for you? For the same amount.

Which brings us to the next question. 

What was the business these folks were engaged in?

1MDB was supposed to bring development to Malaysia. 

The Arabs have no technology,  no business acumen and we are finding out now - no money as well.  

The IPIC guarantee was backed by our own cash.

Unless the IPIC guarantee was to cover a much larger amount for some sort of margin trading account to bet on derivative products and other speculative investments (interest rate swaps, FX hedging also known as "the fund units").

Recall that our Bank Negara lost RM17 billion in the late 80s. Betting the same Forex markets, hedges, swaps, collars, floors and entah apa lagi.

A report said 1MDB had bought RM10.6 billion in low quality shares. 

We have to know what was the acquisition cost of those "fund units" and what they are worth now.

The fund units cannot be worth much because :

• 1MDB did try to transfer "fund units"
• IPIC has refused to accept anything but cash, added the memo.

The Arabs dont want the fund units. They want cash.

posted by Syed Akbar Ali