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Monday, April 25, 2016

IPIC will pay if 1MDB default

Abu Dhabi's state-owned International Petroleum Investment Co (IPIC) said it would make a US$50.3 million interest payment to holders of notes issued by Malaysian state fund 1Malaysia Development Bhd (1MDB), but only after 1MDB defaults on its payments.

A default by 1MDB will occur if the troubled Malaysian sovereign fund fails to make a payment on the 1MDB Energy (Langat) Ltd bond before Monday, April 25, IPIC said in a filing to the London Stock Exchange on Monday.
IPIC guarantees the bond.
The coupon on the US$1.75 billion bond was due on April 18, but terms of the bond gave a five-day period of grace for the payment, which ends Monday.
The Abu Dhabi fund said neither 1MDB Energy (Langat) nor 1MDB have made the payment so far. It said the guarantee has not been called upon yet.
"As at the time of this announcement, IPIC is not aware of the Guarantee being called upon. IPIC has always honoured its obligations arising from any agreements it has entered in to and will continue to do so," it said in the statement.
It was not clear whether a default had already occurred. 1MDB did not immediately respond to a request for comment.
IPIC said a 1MDB default would not mean a cross-default by IPIC on its own debts.
While the interest on the bond was widely expected to be paid, the stand-off between the two state firms, who are locked in a wider dispute, has worried markets and left bondholders waiting on the payment that was due on Monday.
The Malaysian state investor said the interest was owed by IPIC following an agreement struck on June 4, 2015.
But IPIC called off the deal earlier this month, saying 1MDB and its sole shareholder, Malaysia's Ministry of Finance, had failed to meet their obligations, including the full payment of US$1.1 billion plus interest and that they were now in default.
1MDB's 4.4% US$3 billion 2023 < MY090717251=> was still trading steady in the low 90s. The 5.99% US$1.75 billion 2022 is at 99.5/100.
Malaysian Prime Minister Datuk Seri Najib Razak heads the advisory board of 1MDB, which is at the centre of a multi-billion dollar corruption scandal. Money-laundering investigations concerning the fund are now underway in at least six countries including the United States, Switzerland and Singapore.
Source: Reuters

Tuesday, April 19, 2016

WallStreet Update: Dow closes above 18,000 for the first time since last July

Stocks advanced Monday, with the Dow Jones Industrial Average rising above the 18,000 level for the first time since July, as investors shook off oil’s losses on failed output talks and looked toward a bevy of corporate earnings this week.

The index jumped about 100 points to close above 18,000 on Monday.

It's a pretty sweet milestone considering the Dow plunged to just 15,451 in January, as Wall Street freaked out over the crash in oil prices and China's economic slowdown. Cooler heads eventually prevailed as investors realized the American economy is not collapsing and cheap oil is actually good for most Americans.

The Dow is now up 16.5% from its 2016 low, and is within striking distance of its all-time record high of 18,351 set last May. The S&P 500 also closed at a fresh 2016 high on Monday.

Even the Nasdaq is closing in on a key level: The tech index is now down just 1% on the year. That's impressive given the fact the Nasdaq was flirting with a bear market back in February.

Hasbro Inc. surged nearly 6 percent to a record, buoying sentiment after its results beat expectations, thanks in part to demand for Walt Disney Co.’s “Star Wars”-licensed toys.

Disney added 2.9 percent. Energy producers rallied as crude trimmed declines that had reached as much as 6.8 percent. Morgan Stanley was little changed after fluctuating between gains and losses as cost cuts helped the firm report a better-than-forecast profit.

The gains in equities have come even as earnings are forecast to slide at the steepest pace since the financial crisis, pushing the S&P 500’s price-earnings ratio to 19, near a six-year high. Moreover, should the Federal Reserve continue to gradually raise interest rates and the government refrain from adding stimulus, it would be the first time since 1952 that profits turned lower without a recession, Fed easing or fiscal expansion, data compiled by Bianco Research LLC show.

More than 90 companies are scheduled to report results this week, including Goldman Sachs Group Inc., Starbucks Corp. and American Express Co. Analysts are projecting a 9.5 percent decline in first-quarter profit, compared with forecasts for almost flat growth at the start of the year.