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Morgan Stanley: Financial Winner

Stocks in this article: MS I:BKX

Investors' increased comfort with Morgan Stanley is perfectly illustrated by the decline in the company's bond rate spreads. The company on Wednesday issued a 10-year bond paying 3.75%, which was 178 basis points above the yield on 10-year U.S. Treasury bonds. In July 2011, Morgan Stanley issued a 10-year bond with a coupon of 5.50%, which was 250 basis points over the 10-year Treasury yield. That bond traded wider to a spread of about 500 basis points in June of last year, according to Bloomberg.

Morgan Stanley said in its earnings release in January that the company had already met its goal to reduce fixed-income risk-weighted assets to $280 billion from $390 billion at the end of the third quarter of 2011, and was on track to reduce RWA to $255 billion by the end of 2013. Morgan Stanley projects that RWA will decline to less than $200 billion by the end of 2014, setting up an increased return of capital to investors.

The company also said it would accelerate its purchase of the remaining stake in its brokerage joint venture with Citigroup (C) to assume full ownership of the unit by the end of 2013. Morgan Stanley said having full ownership of the brokerage will enable "greater order flow capture," increase deposit funding and lower expenses by eliminating the joint venture agreements. MS Chart MS data by YCharts

Interested in more on Morgan Stanley? See TheStreet Ratings' report card for this stock.

-- Written by Philip van Doorn in Jupiter, Fla.

>Contact by Email.

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Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for TheStreet.com Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.
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