1MDB’s borrowings have risen from RM36bn last year to RM42bn at the end of March 2014.
Points to note:
The RM41.8bn in total borrowings is made up of RM33.5bn in long-term borrowings and RM8.3bn in short-term borrowings.
According to The Edge, the long-term borrowings of RM33.5bn include:
– RM4.3bn in Islamic medium-term notes (coupon rates of 7.2-9.8%)
– RM1.0bn junior Islamic debt (interest rate of 18.1%)
– RM0.9bn sukuk murabahah for the Bandar Malaysia project (5.8-6.0%)
– RM0.6bn term loan for Jimah Energy Sdn Bhd (8.8%)
As you can see, the interest rates are not low. No wonder its finance/interest charges have shot up.
So the Edge raises the question, why isn’t 1MDB using its funds parked abroad instead of borrowing money? After all, it was supposed to have RM7.7bn in Cayman Islands and RM5.2b elsewhere. For this, it received RM437.6m in dividends, which The Edge points out works out to a return of only 3.3% (although Deputy Finance Minister Ahmand Maslan said the returns on the funds to be repatriated will be 6 per cent.)