Thursday, April 25, 2013

The 1MDB bonds: A guide for Malaysian politicians and other idiots

Gwo Burne The Second. If you thought Rafizi Ramli was bad, meet Wong Chen, chairman of the PKR trade and investment bureau. His attempt at "exposing" 1MDB's recent bond issue as "shrouded in secrecy" has exposed himself as the new mo on the block, instead. And there we were thinking that, surely, it would be easy for PKR to replace Gwo Burne with someone better than Gwo Burne himself because there could only be one Gwo Burne in this whole wide world. Well, my sympathies to the long-suffering Kelana Jaya people.

Now, I'm no expert - I'm just a seasoned business journalist and a sometimes controversial socio-political blogger - but I can tell when politicians don't know what they are taking about and Wong Chen does not know what he's talking about.

Shoud stick to issues he understands: Full story h e r e


"Wong said that it was a surprise that the government had allowed a yield of 30 years for this privately placed bond when government guaranteed bonds in the past had only a 20-year yield."
The 1MDB bonds are not guaranteed by the Malaysian government. They are bond guaranteed by parties in Qatar, a sovereign country. Malaysian government-guaranteed bonds such as Petronas, Khazanah or Cagamas are ringgit-denominated whereas 1MDB bonds are US dollar-denominated. To compare different denominated currencies is like comparing apple with oranges.

"We are talking about two different credit risks," a financial advisor told me last night.

"... Local banks would have only charged about six figures,” he said.

Now, this is sooo telling. It you one thing: that Wong Chen doesn't know the industry. He said: “If our local banks had arranged for this exercise, they will only charge a nominal fee as it is considered a national duty to work on government backed bonds"  Math ain't my forte but according to my calculator, a six-figure fee is less than 0.01 per cent of the RM9.3 billion worth of bonds issued. Not even 1 per cent!  Wow. When Ananda Krishnan raised his RM4 billion bonds, he reportedly paid over RM100 million in fees to the banks. Nobody batted an eyelid.

Btw, Wong, national duty is our soldiers and commandos who fought to defend this country and died a "mati katak" death, to quote one of your senior comrades.

p.s. The 1MDB did respond to Wong Chen  in 1MDB: Baseless allegatoins as election ploy

42 comments:

Spesyel Punyer said...

This position "Chairman of the PKR trade and investment bureau" is itself an effin joke all together.

Mior said...

1MDB is the only hedge fund in the world with govertment guarantee.

Outstanding amout of debt 20 billion.What did they buy.A coal mine in Mongolia.Three publuc company from Taib Family.All the three company are not doing well.
BUY power plant ant an inflated price and buy a coal mine in Kalimantan that are not suitable for Tenaga.

How do they spend the rest of money.
1MDB chartered a747 plane on new year eve to fly Najib and Rosmah from LA to Sydney so that they can catch the first sunlight in 2013. then They fly from Sydney to Las Vages in order for them to catch the second sunrise in 2013'

Good luck

Anonymous said...

Rocky... don't be a joker yourself !!
You know nuts about 1MDB.




Lies DAP Told said...

Wong Chen is in need to get some miles point for his campaign... he is riding on Hannah I Am Better Than You Yeoh damn this http://www.facebook.com/LiesDapTold

Anonymous said...

http://www.youtube.com/watch?v=KeNSNzDwx2Q&list=PLKB25AZ3HpxISoimEWdPgD50ruMHfl4sb

Bro pls post this video, about hantu

dergahgrill said...

Not so fast, Bru.

Questions:

1. Why use parties in Qatar to guarantee these bonds?

2. Why couldn't the bonds be raised in Malaysia (Islamic bonds or conventional Ringgit or US Dollar bonds)? Is there some reason these bonds aren't subject to Malaysian governance standards?

3. Did Bank Negara review this bonds offering and approve it?

4. Why park the funds in the Cayman Islands? The place is well known as a tax avoidance and money laundering haven (something that people like warrior 231 have been inveighing against).

It seems to me that these bonds are very strange animals.

After all, how many reputable companies have issued bonds guaranteed by an extra-territorial entity/entities and parked the proceeds in a known tax avoidance/money laundering haven?

Anonymous said...

The set up of these bonds and the investment structure is overly complicated and the use of the Cayman's jurisdiction makes it look bad. The question to ask is why it was done this way. The Cayman's is a tax haven, okay good. But there are secrecy laws which make it difficult to find out who owns or runs the company. While !MDB may file accounts in M'sia, these accounts will probably say that it has raised the funds and sent them to a Cayaman's company. All investment decisions after this will be invisible to the Malaysian public whose money has gone in there. Also, you have to ask why Qatar is raising investment funds here when its own budget surplus is huge and why should it guarantee Malaysians for their investment risk? Eve if they provide the guarantee, under their law does Malaysia have any right to claim if it goes sour? What is the charge for this guarantee? Or is it free? If you want to invest in Central Asian oil fields or anywhere else as a government, why not do it directly, with simple structures. It may be that PetroSaudi and others required this structure, but what are they up to, why the need for secrecy? Are these really the type of people Malaysia wants to do business with? Also, why is the investment in these oil propectors not going through PETRONAS? They should be the ones with the expertise. As far as I am aware, PETRONAS and its fellow national oil companies ARAAMCO/SABIC/QAPCO are not involved, so what expertise is being roped in to look after this investment? Final question, knowing all the secrecy and complexity - would you be confident enough to put your own money into it?

Anonymous said...

spesyel punyer, yes that is an effin joke all right, the same goes with 1MDB, 1Malaysia, ETP and Najib's alphabet soup.

Anonymous said...

Rocky, you miss the main point.....why Cayman Islands, not Malaysia, Abu Dhabi, Singapore etc?

Anonymous said...

dont be stoopid. 1MDB bonds are guaranteed by Msian Govt. Its in the prospectus. Geez

Anonymous said...

You are absolutely the real F...king idiot, Malaysian traitor WHICH could be easily bought over with $$$

Anonymous said...

Not so fast 2.0 Rocky. Who guaranteed those Qatar guarantors?! People do not give a guarantee without back-ups unless they are fools.

I am glad you humbly admit maths is not your forte. Well bonds issuing, buying and trading are maths intensive including use of logic that are even more complicated!

Anonymous said...

kesian Wong Chen...belum sempat naik pentas berceramah sudah kena bantai oleh Rocky the brute !!

Anonymous said...

I really despise DAP and hope all their leaders will rot in hell together with the likes of Anwar,
N. ajis, hadi, Mad Syabu, and the gay Rafizi. I'm coming back to Malaysia just to vote for BN/UMNO because every vote counts. Sorry, Datuk Rocky for my digression!

Anonymous said...

I am a voter at Kelana Jaya and I will definitely not be voting for PKR...Hidup BN

Anonymous said...

The new CEO, what's his name, Hazim, he was handpicked to make changes or just shaking legs and scratching balls waiting instruction from J-Lo and RM? With below average resume, 1MDB will go down the drain under this wannabe. Good luck Malaysia.

Anonymous said...

mior@ 12:14

you like listening to gossip. worse still you swallow rubbish fed by people who talk rubbish. jangan comment macam budak tak sekolah.

Anonymous said...

If this country is going bankrupt why does the opposition want putrajaya so much? To save this country? No need to bullshit. For the past 12 GE's the stupid opposition has been saying this. Does the country look as though it is going bankrupt?

Mr Bojangles said...

Rocky, Rocky.
With this piece, it seems you came up for air from your favourite sniffing places mainly where the sun doesn't shine, and hope to show you are an expert in the field of high finance.

All it does is show up your ignorance and the level of your journalistic ability. In fact journalistic would be too good a word for people whose standards are set by the BN types.

Please lah. Don't shame yourself anymore. Or is that word not in your dictionary.

Anonymous said...

Its a matter of interpretation.

Read again:

Wong said that it was a surprise that the government had allowed a yield of 30 years for this privately placed bond when government guaranteed bonds in the past had only a 20-year yield."

Why cant you take it that the question is on why the money was allowed a 30 year yield outside the country, when even government bonds had only a 20-year yield?

This is about money outflow from the country - and the duration for it to be deposited outside the country.

What will be its worth by then?

You may be a fine business writer.
But do think about the future?

Do we need such monies to be overseas for that duration?

And who benefits from this private funds placement overseas?

I bet you do not have the answer!

PARAMESWARA

Anonymous said...

Why you no want to jual this bonds to Malaysians?

Anonymous said...

what kind of person will tell another to go and die? what kind of leader will do this? this is not the kind of leader i want.

Anonymous said...

Can you also mobilise your expert team to rebutt Mr Guna (his questions only, not slander him) that are now at this link -
http://www.malaysiakini.com/columns/228148 ?

PARAMESWARA

Anonymous said...

Latuk:

This Wong Chen guy didn't get his facts right, but then you should have done what your bosses have done - which is to keep quiet and not bring this matter up. The scam witWh 1MDB can be easily explained as follows :

Rosie goes to CIMB and ask them what is the market yield for 1MDB bonds with either a malaysian government guarantee or a abu dhabi government guarantee.CIMB tells her that both guarantees are about the same rating and the market expects a yield of US Treasuries plus 200 basis points or 2 pct. So if US Treasuries are yielding 3 pct p.a. for 15 years, then the market expects 1MDB bonds to yield 5 pct p.a. for 15 years.

The next steps are when Rosie and Johnny Low pull a fast one on the taxpayers. They go to Goldman Sachs and tell Goldman that 1MDB will be issuing 15 year bonds at Treasuries plus 4.25 pct p.a. Hence the all in yield of the bonds would be 7.25 pct p.a. Goldmans scratch their heads and wonder why 1MDB would issue bonds at this high rate when the market only requires 5 pct p.a. Rosie tells Goldmans not to worry, she already found buyers of the bonds in cayman islands and British Virgin islands. All Goldmans had to do is just lend their name in the prospectus and collect an arrangement fee.

Rosie then sells all the 1MDB bonds to her friends. Her friends in turn sells the bonds to the market at a yield of 5 pct p.a. the difference of 2 pct p.a. is pocketed by her friends. Now for those who can't calculate, 2 pct p.a on USD 3 billion of bonds is USD 60 million (roughly RM 200 million) per year. Multiply that by 15 years and the friends who bought the overpriced bonds stand to earn a total income of RM 3 billion.

Goldmans make an arrangement fee of 2.5 pct by lending their name to the bond prospectus. That's over USD 70 million for joining the scam. Also the Abu Dhabi government gets a guarantee fee of 1 25 pct p.a. which makes the overall cost of issuance by 1MDB at [7.25+1.25] or 8.5 pct p.a. there is reason to believe that the abu dhabi government also gets some form of support letter from MoF. If so, it is clear we never learnt the lessons of PKFZ.

So who gets screwed ? The government of malaysia who represents the taxpayers get screwed. If the government were to issue the bonds directly, the country would only pay 5 pct p.a. With this caymans caper, the cost to our taxpayers is 8.5 pct p.a. the difference of 3.5 pct p.a. on a USD 3 billion issue is over USD 100 million per year. Multiply this over 30 years and you will get an idea of how much has been creamed off by these crooks.

Now that we have learned to inflate our liabities, we will be able to find out who were the first wave of bond buyers who had the good fortune to buy malaysian bonds at such an unbelievable yield.

Ex Merrill Lynch fixed income trader
Latuk Locky knows nuts a out bonds

Anonymous said...

So next time when Najib asks you what you want as a reward for pushing BN shit uphill, you must ask him for a guarantee from the MoF for USD 500 million. Cukup lah 500. Then go issue sovereign bonds at 8 pct p.a. sell them to your buddies' companies and yourself at full value, and then place it out to the market at the real yield of 5 pct p.a. your buddies and you will enjoy annual recurring income of 3 pct on 500 million or USD 15 million a year for the full duration of the bonds. 30 years would be best.

So you want me to be your financial advisor or not ? Let's screw our taxpayers as very few understand high finance.

Ex Merrill Lynch fixed income trader

Anonymous said...

nothing to do with the welfare of nation's coffer, it is more about figuring out how much is left to be grabbed.

Anonymous said...

1:25,

not only putrajaya is a blunder

penang bridge is another one

last but not least, KLCC is a blunder as well.

that's what they say

looking at it, the real intention is not about correcting those "blunders" but to plunder them more!

Anonymous said...

12:04,

U mean Locky should rebut Ur charges the way cina doll' rebuttal is done? and if latuk agreed to it, will U allow him to have this stand: agree to differ?

Anonymous said...

Sorry to say mior's mentality is what majority of PR supporters share....
--Maizattul Akmar

Aidil Yunus said...

Bro Rocky the mail box for editor@mole is full. We are unable to send stuff. Please check. And don't forget to like https://www.facebook.com/LiesDapTold

Anonymous said...

There is nothing wrong with the Sukuk. It is an asset backed issuance. The rates are fare. The fee is also fare.

Anonymous said...

I must give credit to Rosie and Johnny. First time in the history of sovereign finance has a country's liabilities been deliberately inflated to benefit some people hiding in tax free jurisdictions.

This is treason of the highest degree and the perpetrators will be hunted down.

Curi2 1Malaysia

Anonymous said...

DIA YANG IDIOT CAKAP Orang Lain yang Idiot.

BRU The Idiot who doesn't even know HE is the IDIOT!

Anonymous said...

To Ex Merrill Lynch fixed income trader,

You know you are talking nonsense. You can use that logic, if they are issuing private bonds, but its not the case.

Appreciate if could be more honest next time.

Anonymous said...

Rocky:

Do you understand the meaning of inflated liabilities ? 1MDB bought questionable assets at inflated prices and now they are inflating liabilities by overpricing government guaranteed paper ?

God help this country.

Anonymous said...

Another stupid BN supporter. The latest USD 3 billion bonds were structured as private placements. No liquidity whatsoever. You can call Goldman's trading desk and ask them.

Talking about honesty, I can assure you that I will volunteer my services if needed by the next government to investigate these treasonous acts.

Ex Merrill Lynch Fixed Income Trader

Anonymous said...

To Ex Meril Lynch Fixed Income Trader,

Pls don't be too emotional,it shows your overbearingness and lack of wisdom.

Yes you are right, from what I read, its was done through private placements, but your over simplification and insinuations about the yields was badly intended.

Anonymous said...

Anon 8.54

What type of comment is this ? Don't be too emotional when the country is being bled by BN, now with sophisticated structures involving billions ? Your crooks will bring this country to its knees but of course they don't care. They already have offshore accounts in singapore, london, sydney, cayman islands, BVI, Luxembourg.

Unfortunately many rural folks cannot fathom what is 1 billion. They just take their 500.

Anonymous said...

OMG Latuk Locky:

Lu masih tak erti apa yang 1MDB buat ke ? I ingat you pon take tahu berapa "0" dalam satu billion.

Anonymous said...

Perangai dan lidah seperti dajjal. Tidak mungkin dgn akal yg d kurniakan oleh Allah kpd aku , aku KENA pilih si pengkhianat pelacur jantan. Sunggoh tergamak dia bersetongkol dgn sekor dajjal yg mengatakan sandiwara yg berlaku d lahad datu. Mata di korek badan d kelar2 anak2 kehilangan bapa isteri2 hilang tempat bergantung. Tidak mungkin aku pilih kau dajjal sebagai pemimpinku. Sunggoh cukup terang Allah suloh kpd mata hati aku siapa pemimpin sebenar untok aku. AllahuAkbar.

Rachel Matteson said...

Soldiers battle it out with their lives everyday while politicians also battle it out for the profits. This is so pathetic. Poor soldiers, only being used as pawns to their games.
- JROlsenBonds.com

Anonymous said...

Looking at all the racists comments from people who think more about the color of their skin than the survival of their next generation in Malaysia, I wish all you stupid idiots good luck when the country collapse in on its own debt. Sayonara jokers.