Medium-Term Notes

What are the Medium-Term Notes (MTN)?

Medium-term notes are debt securities issued by the organization over a period of time continuously with maturities usually ranging from 5 years to 10 years. Unlike bonds that are issued once, MTN is issued and sold continuously by a dealer or various dealers over a period of time. MTNs are transacted on a Medium-term note brokerage which and not on an exchange. An investment bankInvestment BankInvestment banking is a specialized banking stream that facilitates the business entities, government and other organizations in generating capital through debts and equity, reorganization, mergers and acquisition, more that acts as a dealer sells the notes to the investors on a best-efforts basis and there is no obligation on the dealer to sell a specified amount or the whole of the notes on behalf of the issuer.


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Types of Medium-Term Notes

Depending on the location of the issue of the notes, these are either termed as US Medium-term notes or Euro medium-term notes.

Medium-Term Notes Types

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#1 – US Medium-Term Notes

The medium-term notes that are issued to the investors in the United States are called US Medium-term notes. These are issued and traded in the United States and need to be issued via a US Medium Term Note program. The issuer needs to file a shelf registration of $100 million to $1 billion worth securities with the U.S. Securities and Exchange Commission.

Once the SEC approves the initial application, the issuer files the prospectus describing the Medium-term note. The prospectus has all the broad level information regarding the note issuance. It also has information regarding all the investment banks that are involved in the sale of these notes. The investment banks charge an underwritingUnderwritingThe underwriters take the financial risk of their client in return of a financial fee. Market Makers like financial institution and large banks ensure that there is enough amount of liquidity in the market by ensuring that enough trading volume is more fee for formulating structured products on the basis of the notes issuance.


On 18th July 2019, the Medium Term note for $50,000,000 was issued by The Federal Home Loan Mortgage Corporation (Freddic Mac). The notes bear a fixed interest payment of 2.25% and mature in Jan 2022. The denomination for the notes is $1,000 per note and increments thereof. The first interest payment date is 18th Jan 2020. Underwriters for the notes are Jefferies & Co. Inc., Wells Fargo Securities LLC, and BNY Mellon Capital Markets LLC.

As per the pricing supplement of the notes, the notes are callable after the first interest payment date. The notes bear a fixed coupon which will be paid semi-annually on every Jan 18th and Jul 18th.

Since the notes are issued in the United States for the investors in the United States, this is a US Medium Term Note.

#2 – Euro Medium-Term Notes

When the notes are issued and traded outside the United States and Canada, the notes are called Euro Medium Term Notes. Issuers are facilitated to enter foreign markets easily to gain capital via the issuance of Euro Medium-Term Notes. The Euro Medium-Term Notes allow issuers to access a wide range of markets and currencies. Like US Medium Term Notes, Euro Medium-Term Notes are issued continuously with varying maturities.


Telefónica Emisiones, S.A.U. a Spanish telecommunication provider issued notes worth €40,000,000,000. These notes were to be issued in Series and each Series would have one or more tranches of issuance. The interest rate on these notes will either be fixed or floating which will be further specified in the final terms of the note issuance. The notes are callable after a specified period of time depending on the issuance document.

The dealers involved in the note issuance is BNP Paribas, Banco Bilbao Vizcaya Argentaria, S.A., Banco Santander, S.A., Barclays Bank PLC, Merrill Lynch International, BofA Securities Europe SA, Deutsche Bank AG, UBS Europe SE, Commerzbank Aktiengesellschaft, Credit Suisse Securities (Europe) Limited, Goldman Sachs International, HSBC Bank plc, J.P. Morgan Securities plc, Citigroup Global Markets Limited, Mizuho International plc, Morgan Stanley & Co. International plc, NatWest Markets N.V., Société Générale, and UniCredit Bank AG, to name a few.

Since the note is issued outside the United States and Canada, the note is a Euro Medium Term Note.



  • The cost of servicing of Medium-term notes is incremental and hence can offset the savings made on interest rate payments.
  • Since US Medium-term note issuance has stringent issuance documentation, issuers prefer issuing public bonds instead of multiple note issuances.


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