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    Medium Term Notes (MTN’s)


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    Medium Term Notes (MTN’s) Empty Medium Term Notes (MTN’s)

    Post  Carol on Sat Apr 26, 2014 6:05 pm


    A one-time gift of $700,000 can support a person from pre-school to end of retirement with all expenses paid for food, housing, cars, education, and (possibly) health insurance.

There is a financial instrument called a MTN (Medium Term Note).  They are most commonly purchased with a maturity date of 10 years.  They come with an interest payment of (commonly) 7.5% paid once per year on the anniversary.

    Upon maturity, you can cash them in for full face value. The cost fluctuates but presently you can buy them for under 70% of face value. 

    So, the $700,000 would purchase a $1,000,000 MTN (Medium Term Notes) that would pay out $75,000 per year. This income is taxed at considerably lower rates than earned income (ie: from a job). So if a $75,000 salary can support one person paying the greater tax, then it will certainly support one person at a lower tax rate.

Some may be asking ... "What about inflation?".  Very good ... go to the head of the class! The inflation rate historically is maintained at about 2.5 - 3.0% per annum. So over a 10 year period, it would be roughly 30%. 

    Observe that the purchase price is less than 70% of face value.  So in 10 years, you will have 30% more to purchase the next one.  Thus, your $1,000,000 you get upon maturity will buy the next 10 year MTN with a face value of $1,400,000.  Now 7.5% of $1,400,000 is $105,000 per year.  So you see, it has a 'pay raise' built in.

If you gave a newborn $75,000 per year, would that not be enough to support the child and save for college?

    Would $75,000 per year be enough to support a child in college? Is it enough to pay for a mortgage if they saved the down payment during college?

    If there were 2 people with this plan that got married ... would $150,000 per year be enough to support them? Is $75,000 per year enough for a single adult to retire on (even if social security is $0.00!)? 

    Would it be enough to pay for or reimburse funeral expenses? 

    You see, it is passed down from generation to generation!  Imagine supporting 10, 40, 100 generations of people for a one-time investment of $700,000!

 It is my understanding that you are taxed only when you realize the gain.  So if I were to get paid with MTNs instead of cash, I would not be realizing the gain until I cashed it out in 10 years (which means I am using my tax dollars to invest with for 10 years without penalty).  Second, can I use a like-kind exchange just before maturity to buy another MTN thus postponing the income realization?  Third, can I not do this indefinitely or until they change the tax laws?

    1)  It's a financial instrument issued by one of the top 25 world banks.  They are very common.  They can be found on Euroclear (which will only take cash-backed instruments)
2)  As far as I understand, there is capital gains, earned income, and passive income.

    Earned income gets taxed the most, capital gains (traditionally is taxed the least) and passive income in the middle. 
    Passive income is similar to what qualifies for capital gains but does not meet the time requirement.

    3)  I never said anything about "pulling money out" of the principal. The interest is 7.5% and paid annually. The $700,000 will buy a $1,000,000 MTN and 7.5% of $1,000,000 equals $75,000. 

These are all good questions.  As far as being too good to be true ... LOL.  I know of investments that return $1.875MM in 30 days on a $250,000 investment.  The one above was the 'most believable' for what we've been programmed to believe our whole lives.

As far as safety goes ... the MTNs are only as good as the bank they are originated from.  The banks used are only the top banks like HSBC, Deutsche, etc.  There is risk but I would not personally classify it as high risk.

    What is a Medium Term Note (MTN) ?


Despite the growing number of people actively participating in the private placement and bank instrument business, there are very few that truly understand what a medium term note is.  Though this amuses us to some degree, it also has alarmed us enough to take action.  Since the “MTN” (medium term note) is a major reason the private placement business exists, we felt like it would be a good idea to connect the dots for our readers with less experience.

    For those of you who understood bank instruments prior to this article, we hope this provides additional insight to educate you further. For the rest of our readers, this information will open the door to a new understanding of wealth, while providing facts to help remove uneducated PPP brokers from your network.

    By definition, Medium Term Notes (MTN’s) are debt instruments which are created by banks and sold to investors, having a predefined face value, date of maturity, and annual interest rate. 

For example, you may have a 10 year note issued from Barclays Bank worth 100M, collecting a coupon (interest) of 6.5% per year. Each year you would receive 6.5M until the date of its maturity, where you may cash it in for its full face value.

 Though an MTN has similar characteristics to other debt notes, it is completely unique due to its flexibility, price, resale potential, and ability to be purchased at a discount from face.

    Now that you know what a medium term note is, let’s see why they have become so popular recently.

 Over 50 years ago, when medium term notes (MTN) started to become available, there were very few passive investments which could compete with the benefits of owning a bank instrument. Given the high annual interest rate, possible discount from face value, and solid backing by top 25 banks, many flocked toward those who issued and owned the notes, looking for ways to financially capitalize.   Once the idea of “trading bank instruments” caught on in the secondary market, the private placement business grew steadily, until the entire business changed with the introduction of the internet.

With the explosion of the internet, the secondary market has been flooded with tons of new brokers trying to broker buy/sells of medium term notes, and bank guarantees. Though it may be possible to close a bank instrument deal, it takes an act of god to do so.

    The real discussions about bank instruments, at least for those who are successful, revolve around private placement programs. 

Bank instruments, such as medium term notes and bank guarantees, are the lifeblood to any private placement program.  Since these notes can be purchased at a discount from top banks, traders can earn quite a hefty profit, all while being risk free due to a prior contractual obligation they had with an “exit buyer”.


As we all know, an “exit buyer” is the entity which purchases the MTN/BG at a slightly higher value, but still discounted from face. Once the first exit buyer purchases the note from the trader, the process repeats itself several times until a final buyer purchases it to hold until maturity. By that time, the note has a very small discount (ex. 93% of face), but many conservative buyers are happy with the remaining spread and annual interest.

    Though we could go on forever on the different topics related to medium term notes, if you understand this article, you will have far more knowledge than most you will speak to.  If you would like more information on bank instruments, and their role in private placement programs, please read our extensive article by clicking on this link: “Understanding Bank Instruments, from Bank to End Investor”.

    Remember, education promotes safety, and in the private placement world, safety always comes first. 

InsideTrade LLC Staff


    All broker #####. General motors was the first to issue MTN's. Any security must have a prospectus, offering circular or term sheet. If the so-called seller cannot provide you with any of the above documents which would also include an ISIN, forget it. If you are not licensed and get involved in a MTN transaction you could end up in hot water.

    I Know many people who have been prosecuted behind these PPP's. Be careful this is not a business for those who do not understand the market or finance. All of this CIS, passport crap is for brokers. Real buyers and sellers execute MTN transactions trade desk to trade desk. Please remember that the trade desk is acting on behalf of their client, be he seller or buyer and has vetted the client prior to the securities account being opened. Therefore, say Merrill Lynch is my trade desk and you have passed compliance to open the account. Why would I send a Client Information Sheet to anyone? Never close on one of these and I guarantee it. Very highly regulated market

Also see:


Since these are banking instruments, I'm pretty sure our Private Bankers will be able to connect us to the source for these (v.s. brokers). Given the above, I'd also say you would best have your financial advisory team in place and have them check these out before you get too involved..Actually, the return is much higher than that.  First though, the instrument in my example was a $1,000,000 instrument with a 7.5% coupon rate.  Thus, 7.5% of $1,000,000 equals the $75,000.

So ... you get 10 annual payments of $75,000 plus a $300,000 bonus at the end of year 10.

Accurate figures would be calculated by what is called 'Time Value of Money' but that is way too in depth for this purpose.  But to give rough approximations, I will give you an idea of the return you are really getting (WARNING: If you thought it was too good to be true before ... stop reading!)

Your investment for this example is $700,000 so you get $300,000 after 10 yrs.  This is roughly $30,000 per year.  Add on the $75,000 and you get a total of $105,000.  Now divide the $105,000 by the $700,000 and your return is more in the vacinity of 15%!

What is amazing to me is how much we are all 'programmed' to think 15% per year is a return that is hard to believe.  I once thought that also.  But now I've learned what they do and have come to know that a 25% to as high as 45% return PER WEEK is the expected norm in the arena of private platforms.  There is so much out there for people with money to make money that it is mind boggling. 

I want to warn everyone that the VAST MAJORITY of platforms are scams. You MUST know what to look for to recognize a real one and then you need to know someone that can get you invited to participate. 

    Yes ... INVITED!  These are PRIVATE platforms.  It's not impossible to get an invitation if you know the norms and culture they operate under.

I'm getting sidetracked a bit.  This has been on my mind since the other day when Tony touched on them but said it was for "other people besides you and me" (I think that is a quote .. if not, it's close).  He was right in a sense but wrong in a sense also.  God didn't make anyone of us better than another.  We all operate under the same laws and systems.  It is usually our minds that keep us in our place WAY MORE than from the efforts of others.

After witnessing this RV you should fully realize that what is percieved as reality in your mind is not necessarily real.  Everyone has a layer of boxes that they think in.  When someone 'thinks outside the box' by their standards, they could be still stuck inside another box by someone else's standards.

    For example, some are thinking 7.5% is not possible for a return so that is outside their box.  Yet, I know for a fact that 40%/week is possible ... very possible.  Now, if someone told me I could make 1,000% in 3 months ... I would think they are nuts ... even though there is a good chance I'll make 20,000% in 3 months with the dinar.  Go figure that one!

    What is life?
    It is the flash of a firefly in the night, the breath of a buffalo in the wintertime. It is the little shadow which runs across the grass and loses itself in the sunset.

    With deepest respect ~ Aloha & Mahalo, Carol

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