# Understanding Medium-Term Notes (MTNs): Definition, Maturity, and Benefits

> **Definition**
>
> A medium-term note (MTN) is a type of debt security that typically matures in five to ten years.

## What Is a Medium Term Note (MTN)?

A medium-term note (MTN) is a fixed-income security that usually matures in five to 10 years. These notes fill the gap between short-term (up to five-year maturities) and long-term notes (more than 10 to 30 years maturities).

A corporate MTN can be continuously offered by a company to investors through a [dealer](https://www.investopedia.com/terms/d/dealer.asp), with investors being able to choose from differing maturities, ranging from nine months to 30 years; however, most MTNs typically range in maturity from five to 10 years.

### Ket Takeaways

*   Medium-term notes (MTNs) typically mature in five to 10 years, offering an investment option between short and long-term securities.
*   MTNs provide companies with consistent cash flow and flexibility in meeting financing needs by tailoring debt issuance.
*   Investors can choose from various maturities and dollar amounts, often benefiting from higher coupon rates than short-term notes but lower than long-term ones.   
    Businesses can issue MTNs with call options, allowing them to refinance at lower rates if market conditions improve.
*   MTNs provide the benefit of registering with the SEC just once for various maturities, simplifying the issuance process for companies.

## How Medium-Term Notes (MTNs) Work

By knowing that a note is [medium term](https://www.investopedia.com/terms/m/mediumterm.asp), investors have an idea of what its maturity will be when they compare its price to that of other [fixed-income securities](https://www.investopedia.com/terms/f/fixed-incomesecurity.asp). All else being equal, the coupon rate on an MTN will be higher than that of short-term notes. For corporate MTNs, this type of debt program is used by a company so it can have constant cash flows coming in from its debt issuance; it allows a company to tailor its debt issuance to meet its financing needs. Medium-term notes allow a company to register with the [Securities and Exchange Commission](https://www.investopedia.com/terms/s/sec.asp) (SEC) only once, instead of every time for differing maturities.

## Advantages of Investing in Medium-Term Notes

MTNs provide investors with an option between short-term and long-term investments. This is ideal when an investor's goals extend beyond short-term bonds but don't require long-term commitments. MTNs benefit businesses by providing a consistent cash flow from investors. Businesses can choose to offer MTNs with or without call options.

Though call options often have higher rates, they allow businesses to retire the bond before maturity. This lets businesses benefit from lower rates by retiring old bonds and issuing new ones before maturity. [Non-callable](https://www.investopedia.com/terms/n/noncallable.asp) options carry less risk regarding investment duration and are thus offered at lower rates.

## Exploring the Investment Options with Medium-Term Notes

Investors in the MTN market can choose the precise nature of their investments. This can include a variety of maturity dates as well as dollar amount requirements. MTNs often have higher coupon rates than short-term investments but lower than some long-term securities.

## The Bottom Line

A medium-term note (MTN) is a fixed-income investment with a maturity range of between five and 10 years. Companies can continuously offer them. They can offer steady cash flow for issuers and flexible coupon rates for investors with less risk than long-term notes. MTNs can be issued as callable or non-callable investments.

One of the primary benefits of medium-term notes for issuers is that they only need to be registered once with the SEC, which reduces their administrative burden.

If you're considering investing in MTNs, it's important to understand the risks and benefits and how they fit your investing plan and risk tolerance.