“The government has issued a statement to honour all commitments.

“I have no doubt the government will honour all its obligations that they have,” he told reporters after a keynote address on Global Islamic Finance Forum 5.0 here today.

He was asked on the concerns of sovereign risk of second possible default of 1MDB.

1MDB is facing the possibility of a second default as the coupon payment for its US$1.75 billion bond is due May 12 (tomorrow).

This follows its failure to pay US$50.3 million in interest on another bond, also amounting to US$1.75 billion, last month.

Muhammad in his first public appearance as the governor, said he is quite confident the government will honour all of its debt obligations.

He added: “Also with the resolution of 1MDB, it will improve market sentiments,” he added.

Yesterday, Fitch Ratings Agency said the default on payments to bondholders by 1MDB last month could lead to weaker focus on policy and political instability in Malaysia.

Fitch said this was the only possible risk to Malaysia over the 1MDB default because the bonds are not explicitly guaranteed by the government.

In March, the Ministry of Finance (MOF) in a statement said it will continue to honour all of its outstanding commitments in the financial markets following International Petroleum Investment Company’s (IPIC) move to terminate its agreement with 1MDB, which saw 1MDB’s plans to slash RM16 billion in debts fall through.