Mahanagar Telephone Nigam Limited (MTNL) has announced its inability to fund the escrow account for the 11th semi-annual interest payment due on its 7.05% Bond Series V. The interest payment, scheduled for 12 April 2026, requires funding into the escrow account maintained at Bank of India 10 days prior to the due date, as per the structured payment mechanism outlined in the Tri-Partite Agreement (TPA).
The TPA, signed among MTNL, the Department of Telecommunications (DoT), Ministry of Communications, Government of India, and Beacon Trusteeship Limited, mandates MTNL to ensure adequate funds in the escrow account. However, MTNL cited insufficient funds as the reason for not fulfilling this obligation.
MTNL’s bonds are sovereign guaranteed by the Government of India. In the event of a default by MTNL in paying the principal or interest on these bonds, the sovereign guarantee can be invoked by the debenture trustee, obligating the Government of India to make the payment.
The invocation of the sovereign guarantee is based on the provisions of the TPA, which were filed with the Bombay Stock Exchange (BSE) when the bonds were listed.
Disclaimer: This article is based on a regulatory filing submitted to the National Stock Exchange of India (NSE).
This article is written by Kinjal and reviewed by Aditya Bhagchandani before publication.