COMPLIANCE WITH REGULATION 30 OF SEBI (LODR), 2015- NON FUNDING OF 05TH SEMIANNUAL INTEREST IN ESCROW ACCOUNT MAINTAINED IN BANK OF INDIA WRT MTNL BONDSERIES VIIB (INE153A08113)
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MTNL has informed exchanges that it could not deposit the 5th semi-annual interest payment into the escrow account maintained at Bank of India for its 7.87% Bond Series VII-B (INE153A08113), due on June 1, 2025. The company cited insufficient funds as the reason for failing to fund the escrow account 10 days before the due date as required under the Tri-Partite Agreement with the Department of Telecommunications and the Debenture Trustee. However, MTNL clarified that these are Sovereign Guaranteed Bonds, meaning that if MTNL defaults on principal or interest, the Government of India is obligated to make the payment through invocation of the Sovereign Guarantee by the Debenture Trustee.
This signals serious liquidity stress at MTNL as it cannot even service its bond interest obligations from its own funds. However, retail investors are partially protected since the bonds carry a Government of India sovereign guarantee, reducing the risk of actual loss for bondholders though it raises concerns about MTNL's standalone financial health and the government's continued support burden.