Morgan Stanley to price range accrual step-up notes linked to S&P 500

By Angela McDaniels

Tacoma, Wash., March 22 - Morgan Stanley plans to price range accrual step-up notes with issuer fixed-rate conversion right due April 8, 2026 linked to the S&P 500 index, according to an FWP filing with the Securities and Exchange Commission.

The interest rate will be 6.5% for the first three years. Beginning April 8, 2014, the interest rate will be the per-year rate multiplied by the proportion of days on which the S&P 500 closes at or above 900. The initial per-year rate is 7%, and it will step up to 7.5% on April 8, 2017, to 8% on April 8, 2020 and to 10% on April 8, 2023.

Interest is payable quarterly. On each interest payment date from April 8, 2014 onward, the issuer can choose to exercise its conversion right, in which case the interest rate will be converted to a fixed rate of 6.5% for each subsequent interest payment date.

The payout at maturity will be par.

The notes (Cusip: 61745ED65) will price in March or April. The settlement date will be April 8.

Morgan Stanley & Co. Inc. is the agent.

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