Medium-Term Notes

This chapter discusses medium-term notes (MTNs), which are corporate bonds evolved into an important source of corporate funding. The MTN market is flexible, and individual programs may be adapted to suit the requirements of borrowers and investors alike. Some of the most innovative structures have been observed in the MTN market before their introduction in the conventional corporate bond market. MTN issues are arranged within a program. A company wishing to raise a quantity of medium-term or long-term capital over a period of time has the choice of issuing MTNs or long-dated bonds. Issuers of MTNs usually specify issuing and paying agents (IPAs) responsible for providing investors with the ability to present interest coupons and notes in various locations around the world. Euro-MTNs are essentially identical to MTNs in the U.S. domestic market with the key exception that they are not subjected to national regulations or national registration requirements. The application of financial engineering techniques has resulted in the introduction of exotic MTN structures.