Malaysia's 1MDB says keeping options open on May 11 coupon payment

KUALA LUMPUR (Reuters) - The President of troubled Malaysian state fund 1Malaysia Development Berhad (1MDB) said on Tuesday it was keeping its options open on another coupon payment for a $1.75 billion bond that is coming up on May 11. "We are keeping our options open on the May 11 coupon and will deal with the payment closer to time," Arul Kanda Kandasamy said in an interview with Reuters. Under the terms of an agreement reached in June last year, Abu Dhabi sovereign fund IPIC was to pay the interest for the bond. But International Petroleum Investment Co [INPTV.UL] (IPIC) terminated the deal and said 1MDB was in default. "The guarantee is clear and there is no dispute - IPIC said they will pay under the guarantee and 1MDB as the borrower is the primary obligor," said Arul. The May 11 coupon payment is for a fixed rate 5.99 percent on the $1.75 billion 1MDB Energy Limited notes. 1MDB said earlier on Tuesday it 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. Arul also said he was open to resolving this non-payment issue with IPIC in the best interest of stakeholders. He said the Malaysian fund had no plans to make an early payment on the bonds. (Reporting by Umesh Desai; Editing by Bill Tarrant)