MTNL hits new high as govt deposits ₹92 Crore against bond dues

19 Jul 2024 , 02:55 PM

On the NSE, shares of Mahanagar Telephone Nigam Limited (MTNL) surged as much as 10% to a multi-year high of ₹70.48 on heavy activity. The shrap rally comes after the government deposited ₹92 Crore to pay the state-owned telecom service provider’s immediate bond interest dues.

MTNL announced earlier this month, on July 11, that it was unable to replenish the escrow account for the payment of semi-annual interest on the series VIII-A bonds due to insufficient liquidity.

The bonds are due on July 20, and according to the structured payment method, MTNL must fund the designated trust and retention account 10 calendar days (T-10) before the due date with the amount of the bond’s interest and/or principal obligations.

On July 15, it was announced that MTNL lacked sufficient finances to pay its obligation due later this week. MTNL has ₹4,810 Crore (about $576 million) in local bonds to service through 2024.

The state-owned telco was unable to pay interest on its 7.59% July 2033 notes, which were insured by the government. Interest payments on 14 bonds are due between July and December of this year.

Following this, reports circulated that the Union Government would meet all interest obligations/payments on MTNL bonds. According to sources, the government would respect its duties under sovereign guarantees provided for MTNL bonds and will pay anytime the sovereign guarantee is invoked on MTNL bonds.

They also stated that the government had no intentions to provide any direct financial support to MTNL.

At around 2.41 PM, MTNL was trading 9.99% higher at ₹70.48, against the previous close of ₹64.08 on NSE. 

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