Business
Medium Term Notes
Medium Term Notes (MTNs) are debt instruments with maturities typically ranging from 5 to 10 years. They are issued by corporations and governments to raise capital and are sold through a continuous offering process. MTNs offer flexibility in terms of structure, interest rates, and currencies, making them attractive to both issuers and investors.
Written by Perlego with AI-assistance
Related key terms
1 of 5
3 Key excerpts on "Medium Term Notes"
eBook - PDFBond and Money Markets
Strategy, Trading, Analysis
- Moorad Choudhry(Author)
- 2003(Publication Date)
- Butterworth-Heinemann(Publisher)
The term “medium-term” is something of a misnomer, as the bonds range in maturity from nine months to 30 years or more; however the first MTNs generally had maturities of five years or less. They were originally designed to bridge the gap between commercial paper and long-dated bonds. An MTN is an unsecured debt, therefore the majority of MTNs are investment grade quality. In terms of the way they trade in the market, MTNs are virtually identical to conventional corporate bonds, and the main difference between an MTN and a corporate bond is the manner in which it is issued in the primary market. The unique characteristic of MTNs is that they are offered to investors continually over a period of time by an agent of the issuer, as part of an MTN programme . MTNs are usually offered in the market by investment banks acting as agents, and sold on a “best efforts” basis. The issuing bank does not act as an underwriter of the bonds, unlike with a conventional bond issue, and therefore the borrowing company is not guaranteed to place all its paper. As MTNs are usually offered as part of a continuous programme, they are issued in smaller amounts than conventional bonds, which are generally sold in larger amounts at one time. Notes can be issued either as bearer securities or registered securities. A Euromarket in MTNs developed in the mid-1980s. Euro MTNs (EMTNs) trade in a similar fashion to Eurobonds; they are debt securities issued for distribution across markets internationally. The majority of MTNs are conventional bonds with fixed coupon rate and single maturity date. There is a wide range of structures available however, and MTNs have been issued with floating-rate coupons, call and put features, amortising nominal amounts, multi-currency structures or as part of more exotic structures such as asset swaps. Certain MTN issues are underwritten by investment banks as well, making them indistinguishable from conven-tional corporate bonds.
eBook - PDF- R. Stafford Johnson(Author)
- 2013(Publication Date)
- Bloomberg Press(Publisher)
Bank notes are similar to medium-term notes (MTNs). They are sold as a program consisting of a number of notes with different maturities, typically ranging from one to five years, and offered either continuously or intermittently. Bank notes are usually sold to institutions in high denominations ranging from $5 million to $25 million, with the total offering ranging from $50 million to $1 billion. Different from corporate MTNs discussed in Chapter 7, bank notes are not registered with the Securities and Exchange Com- mission (SEC) unless it is the bank’s holding company (and not the individual bank) issuing the MTN. Banks also sell banker notes and MTNs through international syn- dicates as part of the Eurocapital market (see Exhibit 9.2 for Bloomberg descriptions of bank securities such as bank notes and MTNs). EXHIBIT 9.2 Examples of Bank Securities Intermediary Debt Securities, Investment Funds, and Markets 373 Leveraged Loans Commercial bank loans can be classified as investment-grade loans and leveraged loans. Investment-grade loans are loans to borrowers with investment-grade ratings. They usually take the form of a revolving line of credit, with no maturity and with the bank setting a maximum amount that the company can borrow. Investment- grade loans set up as a line of credit are generally held by the originating bank and not sold. Leveraged loans are loans to corporations with below investment-grade ratings. These loans usually have a maturity and a floating rate, and in contrast to investment-grade bonds, they are often sold to institutional investors. Some of these loans are packaged and securitized as collateralized debt obligations (discussed later in this chapter). Today, leveraged bank loans and some investment-grade loans with specific ma- turities are traded in the secondary markets or securitized to create a collateralized loan obligation. To institutional investors, leverage loans represent an alternative to high-yield bonds.
eBook - PDF- OECD(Author)
- 2013(Publication Date)
- OECD(Publisher)
“Medium-term securities” refers to securities with a residual maturity of greater than or equal to 1 year and less than 10 years. “Long-term securities” refers to securities with a residual maturity of greater than or equal to 10 years. The negotiable debt includes: Treasury bills and Treasury note “Fanambina”. The non-negotiable debt includes various advances of treasury granted by the Central Bank to the Treasury and the various non-marketable liabilities of the state. In 2004, some debt of the state to profit the Central Bank is transformed in assignable marketable instrument managed by the Central Bank. The stocks of local-currency non-marketable debt/Central Bank security, only concern to the yearly advances of Treasury and granted annually by the Central Bank. III. COUNTRY TABLES AND POLICY NOTES: MADAGASCAR AFRICAN CENTRAL GOVERNMENT DEBT 2013: STATISTICAL YEARBOOK © OECD 2013 92 Table III.2. Influences on debt stock Million Madagascar ariary 2003 2004 Accumulations Decumulations Accumulations Decumulations Issuance/ contracting Capitalisation Other Repayments Write-offs Other Issuance/ contracting Capitalisation Other Repayments Write-offs Other 2 Total central government debt 2 036 044.3 .. .. 1 621 154.0 .. .. 2 620 283.7 .. .. 1 675 396.0 .. .. 2.1 Marketable debt 1 735 860.0 .. .. 1 551 580.0 .. .. 1 895 720.0 .. .. 1 582 840.0 .. .. 2.1.1 Short-, medium-and Long-term securities 1 735 860.0 .. .. 1 551 580.0 .. .. 1 895 720.0 .. .. 1 582 840.0 .. .. 2.1.1.1 Local currency 1 735 860.0 .. .. 1 551 580.0 .. .. 1 895 720.0 .. .. 1 582 840.0 .. .. 2.1.1.2 Foreign currency .. .. .. .. .. .. .. .. .. .. .. .. 2.2 Non-marketable debt 300 184.3 .. .. 69 574.0 .. .. 724 563.7 .. .. 92 556.0 .. .. 2.2.1 Loans from official creditors, multilateral 289 976.9 .. .. 26 823.1 .. .. 686 100.1 .. .. 55 495.7 .. .. 2.2.1.1 Local currency .. .. .. .. .. .. .. .. .. .. .. .. 2.2.1.2 Foreign currency 289 976.9 ..
Index pages curate the most relevant extracts from our library of academic textbooks. They’ve been created using an in-house natural language model (NLM), each adding context and meaning to key research topics.
