By Angela McDaniels
Tacoma, Wash., Oct. 18 - MS Structured Step Up Callable Trust Units Series 2010-02 priced $40 million of step up callable units due July 1, 2020 linked to Bank of America Corp.'s 5.625% senior notes due July 2020, according to an FWP 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 coupon is initially 4%. It will step up to 4.5% on July 1, 2014 and to 7.25% on July 1, 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 July 1, 2011, the swap counterparty will have the right to exercise a call option, which would result in a redemption of all of the units, on Jan. 1, April 1, July 1 and Oct. 1 of each year. If that occurs, the swap counterparty will pay the trust a payment equal to the principal amount of the units plus accrued interest.
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 or the early termination of the swap agreement, holders may receive less than the principal amount of the units.
The units are expected to be listed on the New York Stock Exchange.
The issuer said it may increase the size of the offering before the settlement date.
A total of $3 billion of the underlying notes were issued in June 2010.
Morgan Stanley & Co. Inc. is the agent.
| Issuer: | MS Structured Step Up Callable Trust Units Series 2010-02
|
| Issue: | Step up callable units
|
| Underlying securities: | Bank of America Corp.'s 5.625% senior notes due July 2020
|
| Amount: | $40 million
|
| Maturity: | July 1, 2020
|
| Coupon: | Initially 4%; steps up to 4.5% on July 1, 2014 and to 7.25% on July 1, 2018; payable semiannually
|
| Price: | Par of $1,000
|
| Payout at maturity: | Par
|
| Call option: | At par on Jan. 1, April 1, July 1 and Oct. 1 of each year from July 1, 2011 onward; at possibly less than par if trust wind-up event occurs
|
| Pricing date: | Oct. 15
|
| Settlement date: | Oct. 20
|
| Agent: | Morgan Stanley & Co. Inc.
|
| Fees: | 2.25%
|
| Cusip: | 858585AA0
|
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