British pounds

Morgan Stanley re-issues gilt backed plan after 18 month gap

Morgan Stanley has launched the first Morgan Stanley FTSE Gilt-Backed Growth Plan since June 2012, due to a more favourable pricing environment and continued demand for gilt-backed products.

The plan is collateralised with UK government bonds in order to reduce counterparty risk.
 
It has a series of kick-out dates starting from the second anniversary of the plan. If on any of the kick out dates or the plan end date the closing level of the FTSE 100 Index is at or above its initial level, the plan will mature and investors will receive a fixed return of seven per cent multiplied by the number of years that have passed since the plan start date.
 
If the kick-out feature has not been triggered and the plan runs for the full six-year, investors will receive their full capital back at maturity as long as the index has not fallen by 50 per cent or more on any day during the six-year investment term. However, if the index closes at or below 50 per cent of its initial level on any day during the term, capital repayment will be reduced by the amount the FTSE 100 Index has fallen from the plan start date to the plan end date.
 
Nev Godley, vice president, Morgan Stanley, says: “There is continued demand from investors and advisers alike for conservative plans with simple payoffs.  As gilt yields have improved recently, we were able to price a collateralised plan with a simple payoff that could be beneficial to investors. Our gilt-backed series has been one of our most popular product streams as it offers a way to increase counterparty diversification and reduce counterparty risk.”
 
The plan opened for investment on 25 November 2013 and closes on 17 January 2014. It is suitable for direct investment, stocks and shares ISA/transfer of an existing ISA, SIPP, SSAS and also investments from charities, companies and trustees. The deadline for ISA transfers is 10 January 2014.

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