Morgan Stanley is planning its first corporate bond sale since October after the cost to protect its bonds from default fell by 50% over the past four months. An unidentified source close to the matter said the bank may issue five-year notes of at least $500 million this week. It last sold $1 billion of 10-year, 5.5% bonds in October and last sold five-year debt in April 2011 according to Bloomberg.
However, the bank may have to pay a higher rate than other banks as credit default swaps show that traders view Morgan Stanley as the riskiest of the big U.S. banks. At the end of last week, swaps on Morgan Stanley were 282.6 bps vs. the average of 155 bps for other large U.S. banks.
The bank was one of 15 that passed its annual stress test last week, as the Fed did not object to its current dividend or its proposal to purchase and additional piece of its brokerage joint venture with Citigroup (C).
Morgan Stanley (MS : NYSE : US$20.06), Net Change: 0.53, % Change: 2.71%, Volume: 32,097,262