Morgan Stanley Joins the Preferred Stock Party

Morgan Stanley (MS) has announced a new non-cumulative preferred stock issue. The issue likely will be rated just below investment grade.

The shares will have an early redemption date starting 1/15/2025. The issue will only be redeemable on a dividend payment date.

The proceeds of this issue will be used to redeem the 6.625% preferred MS-G which is only redeemable on a dividend payment date – the next payment date is 1/15/2020.

The permanent ticker will be MS-L after it trades for a week or so on the OTC Grey market (temporary ticker not yet announced).

The preliminary prospectus can be found here.

Thanks to mcg and a bunch of other folks all which were on this one right away on the Reader Alerts page.

12 thoughts on “Morgan Stanley Joins the Preferred Stock Party”

  1. I guess I’ve never understood why, if the issuing company is investment grade rated, sometimes their preferreds aren’t. I’m assuming that MS is investment grade.

    Enlighten me, please?

    1. Ron,
      Sometimes it depends on if a subsidiary of the parent company is issuing the preferred. Different ratings apply to different LLC’s and subset corporations of the parent and such. Here are the current credit ratings of MS – the top dog, but the credit ratings change if you are talking about any of the 7 or more subsidiaries of MS….

      Agency Short Term Long Term Outlook
      Moody’s Investors Service P-2 A3 Stable
      Standard & Poor’s A-2 BBB+ Stable
      Fitch Ratings F1 A Stable

      For more info on MS credit ratings, you can check here:

      https://www.morganstanley.com/about-us-ir/creditor-presentations.html#awards

    2. Ron – Oversimplifying terribly, if you were to make a comparison to a mortgage on a house, if you were a lender what would you like the most – to lend and get the house as collateral? to lend on a second lien basis and get paid back only after the primary mortgage lender is paid? or to just lend on the basis of the word of the borrower that he’s going to be good for it? Obviously, in each case, there’s a greater degree of risk involved to the lender and that’s essentially what the rating agencies are trying to do when rating the different types of issues that a company puts out. Preferreds sort of fall in between the lines on this simplified comparison but the principle remains, that the ratings issued by the agencies are attempts to differentiate between the different degrees of risk being assumed by investors in different types of issues by the same issuer.

    3. Companies per se are not rated (I’m ignoring insurance co ratings like Best). Rather, specific tiers of a company’s securities are rated. Preferred, senior secured, senior unsecured, subordinated, commercial paper, and the like. A complex company may have ten ratings.

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