While many ABCP bank sponsors under liquidity pressure have considered issuing asset-backed medium-term notes (MTNs) as one solution to their woes, recently market sources are reporting a particularly robust number of potential sponsors considering MTN and/or hybrid ABCP (or extendible note)/MTN programs - and a new target audience for these programs: unsecured term investors.

"MTN programs can access investors who may not yet be comfortable taking the extension risk on extendible-note programs or who may not yet have internal approval for that product," said Marilyn Hill of Lehman Brothers' asset-backed finance group, who participated in a Standard & Poor's-sponsored teleconference on the topic last Thursday. "MTNs could also be a good investment opportunity for the unsecured investor base, who is often looking for floating-rate product as a hedge to rising interest rates. Of course, these investors will need education and pricing incentive, so they are a targeted audience that needs some development."

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