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Malaysia's central bank says confident government will honor debt obligations

By Reuters/Joseph Sipalan, Praveen Menon   May 11, 2016 | 03:16 pm GMT+7

Malaysia's new central bank governor said he was confident the government would honor all its debt obligations, as a deadline loomed on Wednesday for troubled state fund 1MDB to make a coupon payment on a $1.75 billion bond.

"I'm quite confident the government will honor all of its debt obligations," Muhammad Ibrahim told reporters at the sidelines of an event in Kuala Lumpur.

"Also, with the resolution of 1MDB, it will improve market sentiments," he added.

1Malaysia Development Berhad (1MDB) has to make a payment on a $1.75 billion bond on Wednesday, but there was no indication yet on whether it would be paid.

Last month, 1MDB did not pay a $50.3 million coupon on another $1.75 billion bond, following a stand-off with Abu Dhabi sovereign fund IPIC, triggering cross-defaults on some of its other bonds.