Morgan Stanley-sponsored trust changes coupon for units tied to International Paper's 7.5% notes

By Angela McDaniels

Tacoma, Wash., Nov. 22 - Floating Rate Trust Series 2010-04 (IP) amended the coupon for its upcoming $5 million offering 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 filing 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.

The interest rate will be Libor plus a to-be-determined spread of 115 basis points to 135 bps, subject to a floor of 3% and a cap of 8%. Distribution dates will occur quarterly.

The spread was originally expected to be 135 bps to 165 bps, and the floor was going to be 2%.

Interest is payable quarterly and corresponds to the interest received on the underlying securities plus any payments received by the trust from its swap counterparty, Morgan Stanley & Co. International plc, 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.

Beginning Aug. 15, 2011, the swap counterparty will have the right to exercise a call option, which would result in a redemption of all of the units at par, on Feb. 15, May 15, Aug. 15 and Nov. 15 of each year.

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, the early termination of the swap agreement or International Paper calling the 7.5% notes - holders may receive less than the principal amount of the units.

The issuer plans to list the units on the New York Stock Exchange.

The units (Cusip 33973RAA2) are expected to price and settle in December.

Morgan Stanley & Co. Inc. is the agent.

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