Wells Fargo plans contingent annual interest CDs tied to stock basket

By Angela McDaniels

Tacoma, Wash., Dec. 30 - Wells Fargo Bank, NA plans to price contingent annual interest certificates of deposit due Jan. 27, 2016 linked to a basket of 20 stocks, according to a term sheet.

The equally weighted basket includes the common stocks of Alcoa Inc., Apple Inc., American Express Co., AT&T Inc., Bank of America Corp., ConocoPhillips, Duke Energy Corp., Exelon Corp., General Electric Co., Home Depot, Inc., Honeywell International Inc., Intel Corp., Johnson & Johnson, Lowe's Cos., Inc., Merck & Co., Inc., Nucor Corp., Philip Morris International Inc., Schlumberger NV (Schlumberger Ltd.), Verizon Communications Inc. and Wal-Mart Stores, Inc.

The CDs will pay a coupon in January of each year equal to the sum of the weighted component returns of the basket stocks, subject to a floor of zero.

If a basket stock's return is greater than zero, its component return will be equal to the fixed return, which is expected to be 8% to 12% and will be set at pricing. If a basket stock's return is negative, its component return will be equal to the stock return, subject to a floor of negative 30%.

The payout at maturity will be par.

The CDs are expected to price Jan. 25 and settle Jan. 28.

Morgan Stanley & Co. Inc. is the agent. Morgan Stanley Smith Barney is the distributor.

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