Exchange Traded Notes - ETN


DEFINITION of 'Exchange Traded Notes - ETN'

A type of unsecured, unsubordinated debt security that was first issued by Barclays Bank PLC. This type of debt security differs from other types of bonds and notes because ETN returns are based upon the performance of a market index minus applicable fees, no period coupon payments are distributed and no principal protections exists.

BREAKING DOWN 'Exchange Traded Notes - ETN'

The purpose of ETNs is to create a type of security that combines both the aspects of bonds and exchange traded funds (ETF). Similar to ETFs, ETNs are traded on a major exchange, such as the NYSE during normal trading hours. However, investors can also hold the debt security until maturity. At that time the issuer will give the investor a cash amount that would be equal to principal amount (subject to the day's index factor).

One factor that affects the ETN's value is the credit rating of the issuer. The value of the ETN may drop despite no change in the underlying index, instead due to a downgrade in the issuer's credit rating.

  1. Exchange-Traded Fund (ETF)

    A security that tracks an index, a commodity or a basket of assets ...
  2. Credit Rating

    An assessment of the credit worthiness of a borrower in general ...
  3. Bond

    A debt investment in which an investor loans money to an entity ...
  4. Exchange Traded Products – ETP

    A type of security that is derivatively-priced and which trades ...
  5. Debt Security

    Any debt instrument that can be bought or sold between two parties ...
  6. Structured Note

    A debt obligation that also contains an embedded derivative component ...
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