HG bonds: Morgan Stanley places $7.5B offering on heels of earnings beat; terms

Shortly after posting earnings, Morgan Stanley today completed a $7.5 billion, three-part offering across 2024, 2032 and 2052 notes.

Earlier today, Morgan Stanley released fourth-quarter earnings that included a 51% jump in profits versus the same year-ago period. The money-center bank netted earnings of $1.92 per share, versus estimates of $1.28 per share, and revenue was $13.64 billion, topping the consensus estimate of $11.53 billion, according to S&P Capital IQ. The results were fueled by strong performances in trading, investment banking and wealth management.

In October 2020, Morgan Stanley completed its $13 billion acquisition of E*TRADE Financial Corp. During the same month, Morgan Stanley agreed to purchase Eaton Vance Corp., a provider of investment strategies and wealth management solutions, for an equity value of $7 billion. The transaction, expected to close in the second quarter of 2021, is expected to be funded with cash and stock.

Morgan Stanley tapped the bond market seven times in 2020, totaling $18.5 billion in new issuance. Most recently in December 2020, it placed a $2.5 billion offering, at par pricing, of 0.985% six-year (non-call 5) fixed-to-floating notes due Dec. 10, 2026, at T+60. In November, it completed a $4.5 billion offering of fixed-to-floating notes, at par pricing, across $1.75 billion of 0.56% three-year (non-call two) notes due Nov. 10, 2023, at T+37.5, and $2.75 billion of 1.794% long 11-year notes (non-call 10) due Feb. 13, 2032, at T+85. In October 2020, it printed, at par pricing, $1 billion of 0.864% five-year (non-call four) fixed-to-floating notes due Oct. 21, 2025, at T+55. In April, the bank placed a $3 billion offering, at par pricing, of 2.188% six-year (non-call five) fixed-to-floating notes due April 28, 2026, at T+183.

Morgan Stanley tapped the market twice last March, on either side of the Federal Reserve's March 23 announcement of liquidity backstops for the high-grade credit markets. On March 19, Morgan Stanley placed a $2 billion offering of par-priced 5.597% 31-year fixed-to-floating notes due March 24, 2051, at T+375. On March 26, it inked a $3 billion offering of par-priced 3.622% 11-year (non-call 10) fixed-to-floating notes due April 1, 2031, at T+285.

In January 2020, it priced $2.5 billion of three-year (non-call two) floating-rate notes due Jan. 20, 2023, at 70 basis points over the secured overnight financing rate.

S&P Global Ratings maintains a stable outlook on its BBB+ issuer credit rating, and most recently, in October 2020, it said it viewed the Eaton Vance acquisition as a credit positive. In October, Moody’s placed its A2 corporate ratings for Morgan Stanley on review for an upgrade. In November, Fitch revised the outlook on its A corporate rating to stable, from negative.

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