COMPLIANCE WITH REGULATION 30 OF SEBI (LODR) REGULATIONS, 2015 - NON FUNDING OF 5TH SEMI ANNUAL INTEREST PAYMENT IN ESCROW ACCOUNT MAINTAINED IN BANK OF INDIA WRT MTNL BOND SERIES VIIIB (INE153A08162)
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MTNL has informed exchanges that it could not deposit adequate funds into the escrow account at Bank of India for the 5th semi-annual interest payment due on 24 February 2026 on its 7.61% Bond Series VIIIB (INE153A08162). The company was required to fund the escrow at least 10 days before the due date under the Tri-Partite Agreement with the Department of Telecommunications and Beacon Trusteeship. MTNL attributed the non-funding to insufficient funds. The company clarified that all its bonds are sovereign guaranteed by the Government of India, and in case of default, the Debenture Trustee will invoke the sovereign guarantee with the government obligated to make the payment.
This signals acute financial stress at MTNL as it cannot even service its bond interest obligations from internal funds, though bondholders are protected by a sovereign guarantee. The disclosure is negative for equity shareholders as it highlights cash flow weakness, but the government backstop limits the risk of actual bondholder losses.