Tuesday, June 16, 2009

Morgan Stanley Says It Won’t Issue More FDIC-Guaranteed Debt

Morgan Stanley, which won clearance to repay $10 billion to the U.S. Treasury last week, said today it will also cease issuing new debt that carries a guarantee from the Federal Deposit Insurance Corp.

“Morgan Stanley does not plan nor expect to issue any more debt under the FDIC guaranteed debt program,” said Mark Lake, a spokesman for the New York-based bank.

The FDIC guarantees, which became available in November as part of the U.S. government’s effort to prop up the financial system, enabled banks such as Morgan Stanley to sell AAA-rated bonds at a lower interest rate than investors would have demanded otherwise. Morgan Stanley has issued about $24 billion of debt under the so-called Temporary Liquidity Guarantee Program since Nov. 26, according to data compiled by Bloomberg.

JPMorgan Chase & Co., another bank that won clearance last week to repay the U.S. Treasury, will also stop issuing new FDIC-guaranteed debt, Chief Financial Officer Michael Cavanagh said in an interview on CNBC on June 9.

All of the debt issued under the FDIC’s program matures by the end of 2012, according to Bloomberg data.