By Angela McDaniels
Tacoma, Wash., Nov. 24 - Step Up Callable Trust Units Series 2010-03 (Alcoa) priced $9.25 million of step-up callable trust units due Aug. 15, 2020 linked to Alcoa Inc.'s 6.15% senior notes due Aug. 15, 2020, according to an FWP filing with the Securities and Exchange Commission.
The sponsor of the trust is MS Structured Asset Corp., which is a subsidiary of Morgan Stanley.
The units represent a beneficial interest in the underlying securities.
The coupon is initially 4%. It will step up to 5% on Aug. 15, 2014 and to 10% on Aug. 15, 2018. Interest is payable semiannually 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 Alcoa calling the 6.15% 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.
Morgan Stanley & Co. Inc. is the agent.
| Issuer: | Step Up Callable Trust Units Series 2010-03 (Alcoa)
|
| Issue: | Step up callable trust units
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| Underlying securities: | Alcoa Inc.'s 6.15% senior notes due Aug. 15, 2020
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| Amount: | $9.25 million
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| Maturity: | Aug. 15, 2020
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| Coupon: | Initially 4%; steps up to 5% on Aug. 15, 2014 and to 10% on Aug. 15, 2018; payable semiannually
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| Price: | Par of $1,000
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| Payout at maturity: | Par
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| Call option: | At par on Feb. 15, May 15, Aug. 15 and Nov. 15 of each year from Aug. 15, 2011 onward; at possibly less than par if trust wind-up event occurs
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| Pricing date: | Nov. 24
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| Settlement date: | Nov. 30
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| Agent: | Morgan Stanley & Co. Inc.
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| Fees: | 2.25%
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| Cusip: | 85858AAA9
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