THE MTN IS READY FOR EUROPE
"In January 1985, 25 leading economists on Wall Street
forecast where interest rates would be a year later," recalled John
Gilliam, member of one of the world's most exclusive clubs, the
partnership of Goldman, Sachs. "And 23 of them were dead wrong.
If they cannot forecast rates successfully, it's not surprising
that corporate treasurers reckon that averaging the cost of a portion of
your funds is not a bad idea at all."
In the last three years, medium-term note outstandings have
increased five-fold. The current tally, according to Margaret Rea,
managing director at Merrill Lynch Money Markets, is some $35 billion.
Rather than go long with a major underwritten bond issue, more and more
treasurers have been drawn to issuing smaller, regular slugs of MTNs,
taking advantage of varying interest rates and maturity structures to
average out their cost of funds. The notes have found a...
