State fund 1Malaysia Development Bhd has missed a debt payment of over $600 million that was due at the end of July for allegations of fraud and money laundering. Abu Dhabi has extended a deadline and the company is now required to pay at least $310 million by August 12 and the rest of the money as well plus interest by August 31.
The original deal in April required 1MDB to pay $1.2 billion in two installments to International Petroleum Investment Co. (IPIC) where the first $600 million is to be paid by July 31. 1MDB did not fulfill that payment even when IPIC gave them a grace period to be paid off by Tuesday.
Many foreign investors own a significant share of government bonds in the southeast Asian nation and allegations of fraud involving the company have already frightened investors by weighing on Malaysia’s currency. The company is also a subject of money laundering investigations in at least 6 countries including the United States, Singapore, and Switzerland.