Merrill Lynch to price 10-year leveraged municipal/Libor notes

By Jennifer Chiou

New York, May 15 - Merrill Lynch & Co., Inc. plans to price leveraged municipal/Libor notes due June 2017, according to a 424B3 filing with the Securities and Exchange Commission.

The notes will pay out a floating rate of interest, which will be capped at between 9.85% and 10.85%, with a floor of 0%. Interest will be calculated using a fixed percentage of between 6.95% and 7.95%, plus a leverage factor of eight times the amount by which 0.65 of Libor exceeds the weighted average of the Sifma index, which was formerly known as the BMA municipal swap index.

Investors will receive par on the maturity date.

The notes are expected to settle in June.

Merrill Lynch & Co., the underwriter, said the notes are designed for investors who believe that tax-exempt floating interest rates in the municipal debt market will not materially increase relative to taxable floating interest rates.

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