DAMANSARA MP Tony Pua today slammed Najib Razak for chiding the government for not paying for 1MDB’s bonds ahead of the maturity date to save on interest.

He said the former prime minister was “financially illiterate” if he thought that redeeming bonds traded in the market was like paying off a housing loan.

“Except it isn’t, and that’s why it’s called a bond, and not a bank loan.

“If Najib had kept his mouth shut and sought advice first from his former bankers in Goldman Sachs, they would have schooled him that it is not normal for bonds to be redeemed early because it tends to be very costly to do so,” he said in a statement.

Pua said Najib was “shameless” in trying to shift the blame to the subsequent governments for failing to redeem the debts early with the proceeds from the recovery of the funds which he misappropriated.

On Tuesday, Najib said in the Dewan Rakyat that it was not right to suggest that the people would have to pay the debts of 1MDB.

Najib said public funds were not required because sums of money had been recovered from Goldman Sachs, audit firms KPMG and Deloitte, Ambank and the US Department of Justice.

Pua today said that Najib was ignorant in not knowing that if the government had attempted to acquire or redeem the entire bond issuance, it would have to pay a far higher premium.

“Just as in the stock market when the demand for a stock rises, the share price rises – it is similar in the bond market. 

“Hence there is little likelihood for the government to save interest charges via early redemptions.”

Pua said that for example, the US$1.75 (RM7) billion bond maturing in May 2022 with 5.99% interest rate, was trading at US$105.27  for every dollar on December 31, 2020.

“On paper, this means that, to redeem US$1 of borrowing, the government will have to pay US$105.27, or a premium of US$5.27.”

He added that financially, the only time when it could possibly make sense for the government to redeem the bonds early was if the bonds were trading at a very significant discount in the bond market.

“Then theoretically, the government could try to buy up the bonds below the face value of the bonds. 

“However, in reality, if the market catches on that the government is buying back bonds in the market, then the price of the bonds will shoot up significantly again.

“Regardless, this possibility is moot, because all of the bonds issued by 1MDB are all trading at a premium to the face value today.”

Pua said that Najib was so clueless, corrupt and greedy that he was easily deceived by fugitive businessman Low Taek Jho and paid Goldman Sachs a world record 10% in fees and commissions, indebting Malaysia by more than RM50 billionas a result.

“Thankfully, Pakatan Harapan succeeded in unseating Najib in the 2018 election.

“We had initiated the process to recover all the stolen funds via 1MDB and its related companies with the assistance of the US Department of Justice as well as to claim for billions of ringgit of damages against unscrupulous companies such as Goldman Sachs, and irresponsible auditors such as KPMG and Deloitte Malaysia.” – March 4, 2022.