India Ratings will monitor developments at Mahanagar Telephone Nigam Limited (MTNL) as a government guarantee for a bond issue was invoked after the telco failed to transfer funds for interest payment.
The bonds are rated AAA (CE) by India Ratings as the interest and principal payment are guaranteed by the federal government. According to an agreement, MTNL had to put semi-annual interest in the third-party escrow account ten days ahead of the due date that is July 20, 2024. However, the telco has failed to do so due to insufficient funds.
India Ratings mentioned that it will monitor the developments and take appropriate rating actions. Further, the agreement stated that in case of a default, the government must transfer the funds three days before the actual payout date.
