Sunday, October 7, 2018

1MDB and the USD 28 Billion Signum Magnolia Ltd of the Cayman Islands.

by Ganesh Sahathevan

Image result for IPIC 1mdb

IPIC made an announcement to the London Stock Exchange on 10 October 2018.The announcement concerned ,among other things, the  resumption of its !MDB guarantee obligations by Abu Dhabi's Mubadalla.The announcment included these statements:

Signum Guaranteed Obligations means the notes and loans of Signum Magnolia Limited which are collateralised by the USD 1.75 Billion 5.75% Guaranteed Notes due 2022 of 1MDB Energy (Langat) Limited guaranteed by 1MDB and further guaranteed by IPIC."

There does not appear to be any mention of Signum Magnolia Limited in any previous IPIC announcement which concerned 1MDB.

Signum is a Cayman Island incorporated company. However Emirates NBD Bank describes in its 2012 Annual Report as a Malaysian company:

Some of the notable transactions concluded during the year included acting as mandated lead arranger, advisor and bookrunner for syndicated loans valuing USD 6.5 billion, arranged for high profile clients like Signum Magnolia Limited-Malaysia,

Signum bonds pay a coupon of 4.805%. The bond was issued on 07.01.2013 and has a term of up to 02.11.2022. The company is able to issue bonds with a face value of up to EUR 25 Billion , or USD 28.8 Billion. It is not clear if it has already issued bonds up to the maximum allowable.

It is also unclear where and to whom the coupon differential of 0.895%  is going to.Given the USD 1.75 Billion face value of the 1MDB bonds, the differential works out to approximately USD 160
Million (given half yearly coupon payments and accounting for compounding).

This type of secrecy does not sit well with professed ethos of New Malaysia.

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