Morgan Stanley plans buffered leveraged notes linked to AIG Commodity index, six commodities

By E. Janene Geiss

Philadelphia, March 13 - Morgan Stanley plans to price 0% buffered leveraged securities due March 2013 linked to an index and commodities basket, according to a 424B2 filing with the Securities and Exchange Commission.

The basket consists of the Dow Jones-AIG Commodity index with a 60% weight, natural gas with an 8% weight, primary aluminum and CBOT soybeans, each with a 7% weight and NYBOT cotton No. 2, gold and NYBOT sugar, each with a 6% weight.

If the final basket level increases over the initial level, the payout will be par plus any gain on the basket multiplied by a leverage factor of 130% to 145%. The exact upside leverage will be determined at pricing.

If the basket declines by 15% or less, the payout will be par. Investors will lose 1% for every 1% the basket declines beyond 15%, but will not receive less than $150.

For each component of the basket, the gain will be relative to the forward price on the pricing date for delivery of that commodity in March 2013.

The notes are expected to price in March.

Morgan Stanley & Co. Inc. will be the agent.

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