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1MDB Scandal Turns Funds Cool on Malaysia

  • Unexpected scale of indebtedness leads to fears of downgrade
  • Fiscal, political risks are reasons to be cautious, Pimco says
Bloomberg business news
The scandal around state-investment-fund 1MDB is turning bond funds against Malaysia. Bloomberg’s Ruth Carson reports(Source: Bloomberg)
Updated on

The escalating scandal around troubled state-investment-fund 1MDB is turning bond funds against Malaysia.

The disclosure that the nation’s debt is almost 60 percent higher than previous estimates at 1 trillion ringgit ($250 billion), largely because of hidden liabilities tied to the troubled state investment fund, is convincing even fans of the country’s bonds to cut their holdings. Throw in the removal of a goods and services tax last month, and Prime Minister Mahathir Mohamad’s new government faces an increasing fiscal squeeze.