Morgan Stanley plans callable CMS curve-linked notes tied to S&P 500

By Jennifer Chiou

New York, Sept. 30 - Morgan Stanley plans to price callable CMS curve and S&P 500 index-linked notes due Oct. 19, 2029, according to an FWP filing with the Securities and Exchange Commission.

Interest will accrue at 10% per year for the first two years. Beginning Oct. 19, 2011, interest will accrue at 10% for each day the spread of the 30-year Constant Maturity Swap rate over the two-year CMS rate is greater than 0% and the closing value of the S&P 500 is at least 750. Interest will be payable quarterly.

Beginning Oct. 19, 2011, the notes will be callable at par on any interest payment date.

If the notes are not called, the payout at maturity will be par.

The notes are expected to price in October and settle on Oct. 19.

Morgan Stanley & Co. Inc. is the agent.

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