What is a Mid Term Note (MTN)?
A medium-term note (MTN) is a debt note that usually matures (is paid back) in 5–10 years, but the term may be less than one year or as long as 100 years. They can be issued on a xed or oating coupon basis. Floating rate medium-term notes can be as simple as paying the holder a coupon linked to Euribor +/- basis points or can be more complex structured notes linked, for example, to swap rates, treasuries, indices, etc. When they are issued to investors outside the US, they are called “Euro Medium Term Notes”. Issuance of MTNs to investors based in the US requires a separate US MTN program.
MTNs can be issued with a xed maturity date (noncallable) or can be issued with an embedded call or put options and triggers where the notes will redeem early based on certain parameters. MTNs are most commonly issued as senior, unsecured debt of investment grade credit rated entities which have xed rates. MTNs oer more exibility to the issuer and investor both in terms of structure and documentation.
