What is a 'Euro Medium Term Note - EMTN'

A Euro medium-term note (EMTN) is a medium-term, flexible debt instrument that is traded and issued outside of the United States and Canada. These instruments require fixed payments and are directly issued to the market, having maturities that are less than five years. EMTNs allow an issuer to enter foreign markets more easily to get capital. EMTNs are also offered on a continuous basis, different from a bond issue, which occurs all at once.

BREAKING DOWN 'Euro Medium Term Note - EMTN'

When using EMTNs, issuers must maintain a standardized document known as a program. This program can be transferred across all issues and has a high proportion of sales throughout a predetermined syndication of buyers. Medium-term notes (MTNs) – those traded in the U.S. and Canada, otherwise bearing the same definition as EMTNs – must maintain a different program.

History of Medium-Term Notes

Over the past 10 to 15 years, medium-term notes are emerging as a significant funding source for U.S. and foreign companies, supranational institutions, federal agencies, and sovereign nations. The United States has been issuing MTNs since the beginning of the 1970s, having introduced the debt instruments as an alternative to short-term financing in the commercial paper market and to long-term borrowing in the bond market; this is the reason for the name "medium-term," as they serve as a middle ground.

The use of MTNs didn't gain much momentum until the 1980s, when the MTN market shifted from a fairly obscure byplace – heavily exploited by auto finance companies – to a fundamental source of debt financing for a hundreds of major corporations.

Outside of the United States, the EMTN market has grown phenomenally and continues to attract new and booming businesses and industries.


EMTNs offer diversity; the instruments can be issued in a wide range of currencies. They may also be issued in various maturities, typically up to 30 years, though some may have a much longer maturity. EMTNs can be issued in a number of forms including collateralized, floating rate, amortizing and credit-supported forms. Single issues from an EMTN program can be compared to a Eurobond or a Euronote.


The diversity and flexibility that EMTNs offer are just some of the many benefits of these debt instruments. Another benefit is savings. Fixed costs on underwriting make it impractical for corporate bonds to make small offerings, so the bonds typically amount to more than $100 million. Conversely, drawdowns from EMTN programs – over a one-month time period – generally amount to $30 million. These drawdowns also often have varied maturities and specialized features that have been tailored to meet the borrower's needs.

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