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Morgan Stanley-sponsored trust plans $5 million units tied to International Paper's 7.5% notes
By Jennifer Chiou
New York, Nov. 16 - Floating Rate Trust Series 2010-04 (IP) plans to offer $5 million of floating-rate trust units due Aug. 15, 2021 linked to International Paper Co.'s 7.5% senior notes due August 2021, according to a 424B5 with the Securities and Exchange Commission.
The sponsor of the trust is MS Structured Asset Corp., a subsidiary of Morgan Stanley.
The units represent a beneficial interest in the underlying securities.
Interest will be based on Libor plus a to-be-determined spread of 135 basis points to 165 bps, subject to a floor of 2% and a cap of 8%. Distribution dates will occur quarterly.
The interest will correspond to the interest received on the underlying securities plus any payments received by the trust from its swap counterparty, Morgan Stanley & Co. Services Inc., or minus any payments made by the trust to the swap counterparty.
Unless the units are redeemed earlier, the payout at maturity will be par.
The units are subject to early redemption if the underlying securities are redeemed.
If a trust wind-up event occurs, other than a call, the underlying securities will be sold at market value, any required payments to the swap counterparty will be made and then unitholders will be paid from any remaining amounts.
As a result, if the units are redeemed prior to maturity due to a trust wind-up event, which may include, among other circumstances, an underlying security default or the early termination of the swap agreement, holders may receive less than the principal amount of the units.
The units are expected to be listed on the New York Stock Exchange.
The issuer said the units (Cusip: 33973RAA2) are expected to close in November.
Morgan Stanley & Co. Inc. is the agent.
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