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Foreign Government or
Corporate Medium Term Notes (MTN's)
Medium Term Notes (MTN's)
- "Cash" them in for real dollars or raise a "Credit Line".
Value
conversion depends on many factors, some fixed, some floating such as:
-
Type
of Instrument or Note (Issuing Body) - Government or Corporate Government
Issued are the most desired.
-
Rating from issuing
institution - Government, Bank, Security House, Private What Currency,
US Dollars is always preferred, but others are also acceptable Currency
Fluctuation, if not already in US dollars.
-
Ownership of MTNs -
Corporate, Bank, Trust, Endowment, Pension Fund, Private, Other
Bank Policy Agent or Bank Holding Note(s)
-
Where MTNs are actually
held - Security House, Bank Vault, Bank Safety Deposit Box, Licensed
and Insured Agent, Trust, Other
Market Conditions
Security House, Bonding Agent, Underwriter, etc. - Rating, location,
etc.
Client Anticipation of Return
Place Transaction Occurs
What is done with 'Cash' after conversion
This is becoming a paramount
issue with banks and security houses converting the instrument, the preferred
and acceptable method is to deposit a portion of the redeemed funds with
the honoring bank or security house, usually not less than 50% for a period
of not less than six (6) months. If with a security house the funds can
be put into a money market or reinvested into other securities.
Hints
-
MTN's are a method or
avenue of selling off 'Debt'.
-
MTN's are usually issued
by a Government Entity.
-
MTN's can be issued by
a Public Listed Corporation.
-
MTN's held by individuals
are highly questioned by banks and trading houses throughout the world.
-
Often times, in this
case, it may be easier to raise a 'Credit Line' than convert the instrument
to CASH, especially if an individual is selling the MTNs.
-
Fluctuating World Market
Conditions set the pace and determine the trading value, if any.
-
Usually most every instrument
can be converted, however, some are just Not desirable Trading Instruments
on the current World Market.
-
MTNs and T-Bills are
one of the most sought after instruments.
-
Substantiated "Documentation'
is needed for this type of transaction.
Important
Notice
It is widely considered a
trading rule that any securities are deemed NOT Tradable if they originate
from a non recognized international public trading exchange. This applied
to Any type of Security Note (stock, bond, mutual fund, trust, MTN, debentures,
etc.).
Recommended further reading:
Medium Term Notes and High Yield Investment Programs
1996 Survey
of Corporate Medium-Term Notes
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