Merrill Lynch plans Stars linked to Russell 2000

By Laura Lutz

Des Moines, Feb. 28 - Merrill Lynch & Co., Inc. plans to price Strategic Accelerated Redemption Securities (Stars) due April 2010 linked to the Russell 2000 index, according to an FWP filing with the Securities and Exchange Commission.

The notes will be called at increasing premiums if the index closes above its starting level on any of three observation dates.

The redemption amount will be between 110.9% and 111.3% in April 2009, between 113.5% and 119.5% in October 2009 and between 118% and 126% in April 2010. The exact redemption amounts will be set at pricing.

The payout at maturity will be par if the final index level is at least 90% of the initial level. Otherwise, the payout will be par times the index performance.

Merrill said it has applied to list the notes on the Amex under the symbol "RER."

The notes are expected to price in March and settle in April.

Merrill Lynch, Pierce, Fenner & Smith Inc. and its affiliate First Republic Securities Co., LLC are the underwriters.

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