Mahanagar Telephone Nigam Limited (MTNL) has failed to meet the interest payment obligations on Rs 61 billion worth of sovereign guarantee-backed bonds. These bonds, issued in November 2022, comprise 5,000 government-guaranteed, unsecured, rated, listed, redeemable, non-convertible, and taxable debentures totalling Rs 61.096 billion.
Under the Tri-Partite Agreement (TPA) signed between MTNL, the Department of Telecommunications (DoT), and Beacon Trusteeship, the telecom public sector undertaking is required to deposit the semi-annual interest amount into an escrow account at least 10 days before the due date.
According to the exchange filing, as per the bond agreement, if MTNL defaults on the interest or principal payments, the debenture trustee will invoke the sovereign guarantee. In such a scenario, the Government of India is obligated to cover the payments on behalf of MTNL.
