MTNL shares fall 2% after it fails to fund escrow account for bond interest payment

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Shares of Mahanagar Telephone Nigam Ltd (MTNL) fell 2.05 per cent to ₹57.33 on the BSE today, after the company had announced that it was unable to fund the escrow account for the semi-annual interest payment on its 6.85 per cent MTNL Bond Series, due on December 21, 2024. The company cited insufficient funds as the reason for this delay.

According to the Tripartite Agreement (TPA) among MTNL, the Department of Telecommunications (DoT), and Beacon Trusteeship Limited, MTNL was required to deposit the necessary funds into the escrow account 10 days prior to the interest payment date. 

MTNL’s bonds were backed by a sovereign guarantee from the Government of India, and the government’s guarantee would only be invoked if MTNL defaults on its payment obligations