Otto Marine Establishes MTN

Last Tuesday, Singapore listed Otto Marine established a SGD 500 million (USD 364.6 million) multicurrency term note (“MTN”) programme with arranger Standard Chartered Bank. This gives the shipbuilder the flexibility to issue notes from time to time in series or tranches in any currency as may be agreed between the arranger and the issuer. Each series of notes may also be issued in various amounts and tenors, and may bear fixed, floating or variable rates of interest. The notes will be unconditional, unsecured and unsubordinated and shall at all times rank pari passu with all other present and future unsecured obligations of the company.

To the issuers and investors, the main advantage that MTN has over bonds would be the flexibility of its structure and documentation. In other words, the issuer can potentially pay investors a lower yield by customising the notes in accordance with the features they demand. The issuer can likewise match the terms of the offering with its liabilities and ensure a smoother operating cash flow. The flexibility of MTNs also allows the issuer to take advantage of temporary market opportunities, since a new MTN with specific characteristics can be issued quickly.

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