MTNL rallies over 4% on fund raising plans via bonds

NEW DELHI: MTNL surged as much as 4.4 per cent in trade on Tuesday, after reports suggested that the telecom operator has raised Rs 1,500 crore by selling 10-year bonds at 8.41 per cent annualised rate.

At 09:40 a.m.; MTNL was trading 3.7 per cent higher at Rs 29.10. It hit a low of Rs 28.30 and a high of Rs 29.30 in trade today.

Although the issue was oversubscribed by 1.5 times of its core issue size, it fell short of attaining the target set up by the company. "Our issuance will remain open for subscriptions on Tuesday as well. We are hopeful to mop up about Rs 3,700 crore, including the oversubscription option," a senior official from MTNL told ET on condition of anonymity.

In the bidding process, bonds were priced at 8.24 per cent half-yearly, which is three basis points higher than the average 10-year benchmark bond yield calculated at 8.21 per cent. Repayments will be made at the end of maturity, reports ET.

The firm is also offering call option at the end of nine years. This means the issuer will repay the money after the stipulated period.

Under this structure, investors can avail 8.28 per cent halfyearly, or 8.45 per cent annually. These bonds are rated as triple-A, indicating outside support by the Government of India, added the ET report.