Morgan Stanley plans upside knock-out buffered securities on gold

By Jennifer Chiou

New York, Nov. 16 - Morgan Stanley plans to price 0% upside knock-out buffered securities linked to the price of gold, according to a 424B2 filing with the Securities and Exchange Commission.

An upside knock-out event will occur if the price of gold trades above 175% of the initial price during the life of the securities.

If a knock-out event has occurred, the payout at maturity will be par plus a fixed return of 25% to 30% regardless of the final gold price. The exact rate will be set at pricing.

If a knock-out event has not occurred and the final gold price is greater than the initial level, the payout at maturity will be par plus 125% of the gold return, capped at 93.75%.

If a knock-out event has not occurred and the final gold price is less than the initial level but greater than or equal to 90% of the initial level, the payout at maturity will be par. If the final price of gold is lower than the buffer in this case, investors will share in losses at a rate of 1.1111% per 1% decline beyond the buffer.

The securities (Cusip: 617482PN8) will price and settle in November.

Morgan Stanley & Co. Inc. is the agent.

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