New Issue: Morgan Stanley prices $2.4 million contingent income autocallables tied to BofA

By Marisa Wong

Madison, Wis., June 6 - Morgan Stanley priced $2.4 million of contingent income autocallable securities due June 7, 2016 with step-up redemption threshold level feature linked to the common stock of Bank of America Corp., according to a 424B2 filing with the Securities and Exchange Commission.

The notes will pay a contingent quarterly coupon at the rate of 11.75% per year if Bank of America stock closes at or above the downside threshold level, 80% of the initial share price, on the determination date for that quarter.

If the shares close at or above the applicable redemption level on any of the first 11 quarterly determination dates, the notes will be called at par of $10 plus the contingent coupon. The redemption level is 105% of the initial price for determination dates one through four, 110% of the initial price for determination dates five through eight and 115% of the initial price for determination dates nine through 11.

If Bank of America stock finishes at or above the downside threshold level, the payout at maturity will be par plus the contingent payment. Otherwise, investors will receive a number of shares of Bank of America stock equal to $10 divided by the initial share price or, at the issuer's option, an amount in cash equal to the value of those shares.

Morgan Stanley & Co. LLC is the agent.

Issuer:	Morgan Stanley
Issue:	Contingent income autocallable securities with step-up redemption threshold level feature
Underlying stock:	Bank of America Corp. (Symbol: BAC)
Amount:	$2.4 million
Maturity:	June 7, 2016
Contingent coupon:	11.75% per year, payable quarterly if Bank of America stock closes at or above downside threshold level on determination date for that quarter
Price:	Par of $10
Payout at maturity:	If final share price is greater than or equal to downside threshold level, par plus contingent payment; otherwise, 0.74850 Bank of America shares or, at issuer's option, cash amount equal to value of those shares
Call:	At par plus contingent payment if closing share price is greater than or equal to applicable redemption level on any of first 11 quarterly determination dates
Initial share price:	$13.36
Downside threshold:	$10.688, 80% of initial share price
Redemption threshold:	$14.028, 105% of initial price, for first four determination dates; $14.696, 110% of initial price, for next four determination dates; $15.364, 115% of initial price, for last three determination dates
Pricing date:	June 4
Settlement date:	June 7
Agent:	Morgan Stanley & Co. LLC
Fees:	2.25%
Cusip:	61762E562

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