Medium-term notes (MTNs) are debt securities with a maturity between one to ten years. They are typically issued by corporations, banks, and financial institutions to raise capital for various purposes. MTNs are a popular financing option due to their flexibility and ease of issuance.
MTNs are often offered as part of a program, known as an MTN program, which allows issuers to continuously offer new notes to investors. This flexibility allows issuers to take advantage of favorable market conditions and adjust the size and timing of the issuances to meet their funding needs.
Investors in MTNs can include both institutional and individual investors. They are attracted to MTNs because of the potential for higher yields compared to other fixed-income securities. The interest rate on MTNs can be fixed or floating, depending on the terms of the note.
One key advantage of MTNs is their tradability. MTNs can be bought and sold in the secondary market before their maturity date. This provides investors with liquidity and the opportunity to exit their positions if needed.
Overall, medium-term notes offer issuers a flexible and cost-effective way to raise capital, while providing investors with an attractive investment option. With their diversity in terms of maturity, interest rates, and issuers, MTNs continue to be an important part of the global debt market.