This practice note examines recent market trends regarding medium-term note programs (MTN programs), providing an overview of the market in 2020 and 2021 with a focus on general deal structure and process, and disclosure trends. Financial service companies, such as bank holding companies, continued to use MTN programs as their vehicles for issuing large, underwritten offerings of notes as well as structured notes in 2020. The year 2020 saw a significant increase in the use of the secured overnight financing rate (SOFR) as a base rate replacing U.S. dollar LIBOR. In 2021, some issuers linked their floating rate notes to new rates designed to offer alternatives to SOFR, such as Ameribor and the Bloomberg Short-Term Bank Yield Index (BSBY), both of which have a credit element. The major change still to come in 2021 will be updating U.S. rates definitions in MTN programs in response to the new 2021 ISDA Definitions, which will come into effect on October 4, 2021.

Originally Published in LexisNexis Practical Guidance - August 2021 .