In the words of Abdul Wahid Omar, Economic Planning Minister of Malaysia:
“The model that they took was low capitalization and huge borrowings, and I think as they found out, it wasn’t a sustainable model. With that came debt realization, where the board has now embarked on a rationalization plan.”
Worse of all, the company was the utter and complete property of the Malaysian Ministry of Finance. Some of the bonds 1MDB offered were rather attractive – coupons at 4.4% and 5.99%.
Wonder what is the international politics behind all the investigations by the United States, Singapore, Switzerland and Seychelles…
Pauline Chiou and Nyshka Chandran. (21 Apr 2016). 1MDB was unsustainable due to low capital, high debt: Abdul Wahid Omar. http://www.cnbc.com/2016/04/03/1mdb-was-unsustainable-due-to-low-capital-high-debt-abdul-wahid-omar.html. CNBC.
London School of Economics. (2 Apr 2014). Senator Dato’ Sri Abdul Wahid Omar, Minister in the Prime Minister’s Department. http://www.lse.ac.uk/LSEAsiaForum/AsiaForum2014/LSE-Asia-Forum-Speakers/DatoSriAbdulWahidOmar.aspx. LSE Asia Forum 2014 – Malaysia.
See also the earlier post on bonds.