Morgan Stanley's $10 billion note offering locks in fixed rates now — but interest resets to SOFR in years, not decades

Investors in Morgan Stanley’s new $9.5 billion fixed/floating notes will begin receiving interest tied to future SOFR levels as soon as April 10, 2029. The firm priced $10.0 billion in debt on April 15, 2026, including a $500 million floating rate tranche due 2030 and three larger tranches maturing in 2030, 2032, and 2037 that carry fixed rates now but reset to Compounded SOFR later. The fixed rates are 4.555% for the 2030 tranche, 4.809% for the 2032 tranche, and 5.296% for the 2037 tranche. Each switches to floating interest on April 10, 2029, April 16, 2031, and April 10, 2036, respectively. Once converted, interest will be based on Compounded SOFR plus spreads of 0.960%, 1.180%, and 1.410%. The floating rate tranche due 2030 pays interest based on SOFR plus 0.970% with quarterly resets from issuance. Morgan Stanley may redeem the notes on or after October 19, 2026, either at par or under a make-whole provision that compensates investors based on the present value of remaining fixed payments. The make-whole price is calculated using the treasury rate plus 15 or 20 basis points, depending on the tranche. The Bank of New York Mellon acts as calculation agent. If SOFR becomes unavailable, Morgan Stanley or its designee may unilaterally select a replacement benchmark and adjustment, with no consent required from noteholders, potentially altering interest payments and market value.