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About Corporate Medium-Term Notes
Since 1997 the Federal Reserve Board has been obtaining the data on the issuance of medium-term notes (MTNs) from the Depository Trust Company (DTC), a national clearinghouse for the settlement of securities trades and a custodian for securities. The DTC performs these functions for almost all activity in the domestic market. Before 1997, the data were based on surveys of U.S. corporations that borrow in the MTN market.
MTNs are a major source of funding for U.S. investment-grade corporations. A highly flexible debt instrument, MTNs are designed by the borrower to take advantage of funding opportunities and respond to investor preferences. MTNs may be issued with floating or fixed rates, maturities ranging from nine months to thirty years or longer, and special features tailored to meet the needs of particular borrowers.
For example, a company under its MTN program might post a schedule of debt securities with a range of maturities and rates. Investors could pick securities from the list and negotiate terms with the issuer directly or through an agent. In contrast to MTNs, corporate bonds tend to be issued in larger amounts and at the same rate and maturity to all investors.
The MTN data do not include offerings by foreign corporations, sovereigns, or federal agencies. The data include MTNs offered by bank holding companies but exclude deposit notes and bank notes offered by banks because these securities are exempt from SEC registration under section 3(a)2 of the Securities Act of 1933. The Federal Reserve collects these data to improve its estimates of new securities issues of U.S. corporations as published in the Federal Reserve Bulletin and to improve estimates of corporate securities outstanding as shown in the Federal Reserve's flow of funds accounts. The Federal Reserve regards as confidential the data on individual firms.