COMPLIANCE WITH REGULATION 30 OF SEBI (LODR), 2015 NON FUNDING OF 05TH SEMIANNUAL INTEREST WRT MTNL BOND SERIES VII A (INE153A08105)
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MTNL has informed the stock exchanges that it could not deposit the required amount into the escrow account to pay the 5th semi-annual interest on its 8.00% Bond Series VII A (INE153A08105), which falls due on 15 May 2025. Under the Tri-Partite Agreement, MTNL was supposed to fund the escrow 10 days before the due date but cited 'insufficient funds' as the reason for non-compliance. The bonds are sovereign guaranteed by the Government of India, meaning that in case of default, the Debenture Trustee can invoke the sovereign guarantee and the government is obligated to make the payment to bondholders. MTNL has not mentioned any restructuring or alternative arrangement.
This is a credit-negative signal for MTNL, indicating serious cash flow stress. However, because the bonds carry a sovereign guarantee from the Government of India, retail investors holding these bonds are likely to be protected, though the delay and invocation process may cause inconvenience. For equity shareholders, this highlights ongoing financial weakness at MTNL.