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Centre in dock for missed payments on HOCL bond

Our Banking Bureau  |  Mumbai 

After HMT, another "default" on a Central government guaranteed bond is in the making. The principal of Rs 100 crore plus interest of about Rs 8 crore on a one-year bond issued by Hindustan Organic Chemicals Ltd (HOCL) has not been deposited in an escrow account as per the terms of the bond issue "" one month before the maturity date of August 28.
The government first missed the original deadline of July 28 and then the rescheduled deadline of August 13 set by UTI Bank, the trustees to the bond issue.
The government has only deposited the interest portion of about Rs 8 crore and not the Rs 100 crore towards the principal, sources said.
UTI Bank had communicated to the government the failure to deposit the required amount in the designated account on July 28 and subsequently, conveyed the new deadline.
The government depositing interest due in the escrow account does not suffice for adherence to the structured payment mechanism for servicing dues to investors, the sources added.
CARE Ratings, the rating agency, has put HOCL on "credit watch" following the failure on the part of the government and HOCL to deposit the principal plus interest in the designated escrow account on July 28.

First Published: Thu, August 18 2005. 00:00 IST