The move is aimed at amicably settling a spat with International Petroleum Investment Co (IPIC).
IPIC, the debt’s Abu Dhabi co-guarantor, was compelled to service the coupons earlier in 2016, which had led to the deepening of a US$6.5 billion (RM29.1 billion) dispute.
Second Finance Minister Johari Abdul Ghani told Bloomberg the payments could be part of an approach by 1MDB’s management to settle the spat, even as the two sides pursue arbitration talks.
The finance ministry oversees the state-owned investment company and is increasingly taking over its assets and projects as the government winds down the fund.
1MDB and IPIC are locked in a tussle over repayments on two sets of bonds issued by 1MDB and co-guaranteed by IPIC.
That led to a default in April, adding to the problems of 1MDB which is at the centre of global probes into alleged money laundering and embezzlement. IPIC paid the coupons after 1MDB missed them in April and May, Bloomberg said.
IPIC is seeking US$6.5 billion from 1MDB and the Malaysian government for failure to perform their debt obligations. Among the issues between the two are billions in allegedly missing funds, according to the report.
“As far as 1MDB is concerned, the bond is still a 1MDB bond,” Johari told Bloomberg, of the coupon payments made this quarter.
Johari said the company’s management would decide who should provide the funds to pay subsequent coupons on the two US$1.75 billion dollar bonds.
Bloomberg said 1MDB didn’t immediately reply to an email seeking comment.
“We had made a payment to IPIC — US$3.5 billion — so if they say they have not received it, this is where we have to sit down and see what happened,” Johari was quoted as saying.
1MDB has said it could be a victim of fraud if payments intended for IPIC never made it there, while the latter had denied ownership in the company that 1MDB transferred money to, Bloomberg said.
The arbitration is still at the case management stage.
1MDB, Johari said, was simultaneously trying to find a way to “sit down and resolve this amicably” with IPIC.
Saying the Ministry of Finance had taken control from 1MDB of the development of the Tun Razak Exchange financial district and was also overseeing the Bandar Malaysia development, Johari added: “We are going to run off 1MDB, there are no more activities in 1MDB.”
He admitted there were lessons to be learned from the 1MDB episode.
Johari added: “What I want to stress is that this is something that won’t make the Malaysian economy collapse. We must learn from the mistakes we made. We must make sure we have the right business model, good management and good corporate governance.”