The market for medium-term notes (MTNs) is often seen as a bellwether for the rest of the bond market. When MTN bankers start seeing signs of stress, it often does not take long for cracks to appear in the public bond markets.
Debt bankers were thus relieved with the robust start to the year made by the MTN market. This came in spite of the high supply of public bonds, including several benchmark-sized ones. Often in a fragile and recovering market, investors tend to focus on high-profile, public deals and only switch to MTNs, which are usually driven by reverse enquiries, when they are more confident about the market’s medium-term health. “Sometimes there’s a lack of focus from investors on MTNs when there is a lot public issuance,” says Olly Johnson, head of MTNs at Bank of America-Merrill Lynch. “But despite a busy public market, flows of MTNs have been good so far this year.”
