Definition of ‘Medium Term Note – MTN
Definition of ‘Medium Term Note – MTN’
- A note that usually matures in five to 10 years.
- A corporate note continuously offered by a company to investors through a dealer. Investors can choose from differing maturities, ranging from nine months to 30 years.
Explain Medium Term Note – MTN’
- Notes range in maturity from one to 10 years. By knowing that a note is medium term, investors have an idea of what its maturity will be when they compare its price to that of other fixed-income securities. All else being equal, the coupon rate on medium-term notes will be higher than those achieved on short-term notes.
- This type of debt program is used by a company so it can have constant cash flows coming in from its debt issuance; it allows a company to tailor its debt issuance to meet its financing needs. Medium-term notes allow a company to register with the SEC only once, instead of every time for differing maturities.
High number of people actively participating in the private placement process and bank instrument business, there are very few that truly understand what a medium term note is. We would like to give a short brief about this business to our valued clients.
Since the “MTN” (medium term note) is a major reason the private placement business exists.
This information will open the door for your understanding of wealth, while providing facts to help remove uneducated Private Placement brokers from your network.
By definition, Medium Term Notes (MTN’s) are debt instruments which are created by banks and sold to investors, having a predefined face value, date of maturity, and annual interest rate.
For example, you may have a 10 year note issued from Barclays Bank worth 100M, collecting a coupon (interest) of 6.5% per year. Each year you would receive 6.5M until the date of its maturity, where you may cash it in for its full face value.