An EMTN (euro medium term notes) programme is essentially a platform, using a standard documentation framework, for borrowing from capital markets or offering debt investment products. The EMTN allow issuance of series of notes with different denominations, currencies and interest rates (e.g. zero, fixed, floating or index-linked) from time to time.
An EMTN programme documentation typically consists of a base prospectus (sometimes called an offering circular which may be
supplemented by other documents such as a supplemental prospectus) and is usually updated annually. The base prospectus typically sets out, inter alia:
- a general description of the issuer and the programme
- investment risk factors
- terms and conditions of the notes
- form of the notes (e.g. bearer or registered, global or definitive) and clearing system (e.g. via Euroclear)
- the relevant laws and regulations which govern the programme including any selling/transferring restrictions and withholding tax, if applicable
The notes may be subject to other terms and conditions contained in e.g. paying agent agreement, calculation agreement and dealer agreement. The latest financial statements of the issuer and the relevant parties (e.g. guarantor) are normally included in the prospectus or incorporated by reference.
terms and conditions of the notes
The notes terms and conditions will typically set out:
- interest and calculation
- redemption and purchase of the notes by the issuer
- payment and payment dates
- default and enforcement
- terms of guarantee, if any
- contingencies such as merger or consolidation of the issuer and market disruption events (e.g. in relation to equity or index linked notes)
The notes terms and conditions are supplemented by a pricing supplement which set out the additional terms and conditions of each series of notes.
The contents of a pricing supplement will usually include, inter alia, terms such as:
- ISIN (international securities identification number) and common code
- principal amount of the series
- currency of the notes
- maturity date
- rate of interest (or a formula of calculating the rate)
- interest payment date
- redemption (including early or mandatory redemption)
listing and rating
A programme may or may not be listed but will frequently has a rating issued by one or more rating agencies such as Fitch Ratings, Moody’s Investors Service, Standard & Poor’s Rating Service. The listing and rating of a programme reflects the requirement of its investors i.e. some investors can only invested in a listed programme because of their internal investment guidelines.
Last updated 20 June 2006^
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