Morgan Stanley Prices New Preferred

Morgan Stanley has priced their previously announced new fixed rate preferred.

The issue is non-cumulative, qualified, NON investment grade and 20 million shares priced at 4.875%.

With all the substandard coupons we have seen I should be used to being disappointed in these meager coupons–but I’m not!! If it was investment grade–then maybe 4.875% would be right–but they fall short of investment grade.

Oh well–it is what it is and my simple answer is –NO I won’t buy any.

The pricing term sheet is here.

Thanks SteveA for being on top of this one.

8 thoughts on “Morgan Stanley Prices New Preferred”

  1. More and more it’s dawning on me that we are going to be stuck in a 0 rate environment for another decade. U.S. deficit growing faster than the economy with no political will to balance the budget. Our precarious economy hinges on cheap debt. Am I going to seriously regret not scooping up this insultingly measly 4.875% issue because the markets are going to pump out 2.5% non investment grade preferreds in another year? I’ll be here to comment then. But for today, I’m gonna pass too. Even DTP (DTE units rated BBB-) is giving 6.25%.

  2. In addition to Tim’s comments above: They are also Non-cum and to borrow from Canada “NCVV” or non viability contingent capital.
    PS: There is an SA writer that is good and worth reading: Lyn Alden Schwartzer. I would give her last articles an A+ and predict that she will soon get tired of the replies from SA readers. I hope she does not even review the comments. I have followed her since I first read an article from her and this latest are not only loaded with content for investors who are interested in The Long Trend. rather than the blather of The News. Straight, no chaser research, facts and long trend, esp pertinent now. Worth a peek. Too bad I’m too old for her, but new, smart leaders DO appear! JA

  3. BXS-A with its 5.5% coupon seems generous in comparison considering it has the same BB+ rating as this MS preferred. I guess MS has “the name” which allows them to borrow at lower cost. But I wouldn’t value the name more than 25 bps. I’ve got a small position at 24.96 in BXS-A for a flip. From a risk standpoint, I think I prefer a boring regional bank from Tupelo over some fancy Wall Street brokerage with who knows what under the kimono.

    1. I brought a full share of BXS-A. Not sure how long I will hold it. It is in my tactical portfolio not my long term holdings

      1. I like the term “tactical”. It’s like we’re at war, maybe against lower rates. Who knows.

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