Shares of Mahanagar Telephone Nigam Limited (MTNL) declined by 3.66% to Rs 43.48 during Monday’s trading session. The stock hit an intraday low of Rs 43.85 on the BSE as the company announced its inability to fund the escrow account for its bond obligations due to insufficient funds.
Key Details:
- MTNL has cited a lack of funds as the reason for failing to transfer the necessary amount into the escrow account for its 7.59% MTNL Bond Series VIII-A. The payment was scheduled for January 20, 2025.
- The bond issue has a sovereign guarantee by the Government of India. In case of default, the government is obligated to fulfill the payment requirements, ensuring no impact on bondholders.
Market Reaction:
The announcement triggered selling pressure on the stock, resulting in a 4% decline by the afternoon session. As of 1:30 PM IST:
- Previous close: Rs 45.13
- Day’s low: Rs 43.85
- Market cap: Rs 7,800 crore
Background:
An escrow account is utilized to secure funds for meeting financial commitments. The inability to fund such accounts can raise concerns among investors regarding the company’s liquidity and operational efficiency. However, MTNL’s sovereign backing mitigates the risks for bondholders.
TOPICS:
MTNL