KUALA LUMPUR: Bank Negara Malaysia Governor Datuk Muhammad Ibrahim expressed confidence today that the government will honour all its debt obligations.

He said this in response to the deadline for 1Malaysia Development Bhd (1MDB) to make a coupon payment on a US$1.75 billion bond, due today.

"I am confident that the government will honour all its debt obligations," he told reporters on the sidelines of the Global Islamic Finance Forum 5.0 here today.

Muhammad also said with the resolution of 1MDB, it would improve market sentiment.

1MDB will have to make an interest payment of US$52.4 million on the second US$1.75 billion bond it had issued by 5pm London time today (1am Thursday in Malaysia).

The bond was issued by 1MDB Energy Ltd, with proceeds channeled towards the purchase of power assets.

The second bond, together with the first issuance of US$1.75 billion by 1MDB Energy (Langat) Ltd, with a 5.75 per cent coupon rate maturing in 2022, was arranged by Goldman Sachs and co-guaranteed by Abu Dhabi's International Petroleum Investment Co (IPIC).

On April 25, 1MDB missed a US$50 million coupon payment on a 5.75 per cent bond due in 2022, prompted by a dispute with IPIC.--BERNAMA