Morgan Stanley plans contingent income step-up notes linked to indexes

By Angela McDaniels

Tacoma, Wash., June 2 – Morgan Stanley plans to price callable contingent income step-up securities due June 30, 2025 linked to the worst performing of the Russell 2000 index and the Euro Stoxx 50 index, according to a 424B2 filing with the Securities and Exchange Commission.

Each month, the notes will pay a coupon at the applicable rate if each index closes at or above its coupon barrier level, 70% of the initial level, on the determination date for that month. The applicable rate will be 7.5% per year in years one through four, 10% per year in years five through eight and 12% per year in years nine and 10.

The payout at maturity will be par plus the final contingent coupon, if applicable, if each index finishes at or above its downside threshold level, 50% of its initial level. Otherwise, investors will be fully exposed to the decline of the worst-performing index.

Beginning June 30, 2016, the notes will be callable at par on any quarterly redemption date.

Morgan Stanley & Co. LLC is the agent.

The notes will price June 25 and settle June 30.

The Cusip number is 61761JA74.

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