Morgan Stanley plans contingent income autocallable securities tied to United Technologies

By Jennifer Chiou

New York, Nov. 8 - Morgan Stanley plans to price 0% contingent income autocallable securities with step-up redemption threshold level feature due November 2015 linked to the common stock of United Technologies Corp., according to an FWP with the Securities and Exchange Commission.

If United Technologies stock closes at or above the step-up threshold level on a quarterly determination date, the notes will pay a contingent payment of 2% to 2.5% for that quarter. The exact contingent quarterly payment will be set at pricing.

The threshold level is 105% of the initial price on the first four determination date, 110% of the initial price on the next four determination dates and 115% of the initial price on the ninth through 11th determination dates.

If the stock closes at or above the initial share price on any of the first 11 quarterly determination dates, the notes will be redeemed at par plus the contingent payment.

If the notes are not called, the payout at maturity will be par plus the contingent payment unless the final share price is less than the downside threshold level, in which case the payout will be a number of United Technologies shares equal to $10.00 divided by the initial share price or, at Morgan Stanley's option, the cash equivalent.

The notes (Cusip: 61761H400) are expected to price in November and settle in December.

Morgan Stanley & Co. LLC is the agent.

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