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MTN's: A vision of the future

The Euro-MTN market has just passed $500 billion in outstandings. But, despite its obvious importance, few capital markets executives understand fully how the market works - or can see where it is going. With the help of a new Euromoney database, Kieran Clifton explains how EMTNs are poised to take over the international debt market.

The Euro medium-term note (EMTN) market is 10 years old this year. In 1986, Euromoney quoted Brian Woolley, then head of capital markets at Citibank International, saying: "One day the MTN will take over the world." Woolley is now a managing director at Citi. "I was 10 years ahead of my time," he says. "I was absolutely right. MTNs are now the predominant way of issuing international debt."

The EMTN market has just grown bigger than its parent, the US MTN market. Last month EMTN outstandings passed half a trillion dollars, according to The MTN Desk, Euromoney's new database of MTN programmes and issues. Over the past 10 years, there have been more than 10,000 deals in 32 currencies from 500 issuers. The EMTN is taking over the international bond markets too - outstanding deals launched off MTN programmes now represent 45% of Eurobond issues compared with 14% in 1991.

"Soon all fixed-income debt will be done off a single debt issuance programme," says Bruce Cairnduff, head of MTNs at Sumitomo Finance. "Issuers won't need anything else." In other words the MTN market will one day become the international debt market.

Cost, speed and flexibility

But this outcome is not widely appreciated.