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NEW YORK - MORGAN Stanley has set the range of prices at which China's US$5 billion (S$7 billion) of securities can be converted into the bank's stock in 2010, as part of the country's investment in a 9.9 per cent stake in the second largest United States investment bank.
Under terms disclosed on Friday, the Chinese fund will pay between US$48.07 and US$57.684 for Morgan Stanley shares.
China's foreign exchange fund last week agreed to buy the stake after Morgan Stanley, second only to Goldman Sachs in the US by market capitalisation, recorded US$9.4 billion of losses in subprime mortgages and other assets.
China essentially bought securities that convert into shares of Morgan Stanley in August 2010 as part of that investment.
If Morgan Stanley's shares are trading below US$48.07, the US$5 billion face value of China's investment will be used to buy Morgan Stanley shares at US$48.07.
If Morgan Stanley's shares are trading between US$48.07 and US$57.684, China's US$5 billion will buy the shares at their market price.
If the investment bank's shares are over US$57.684, China's US$5 billion will buy Morgan Stanley shares at US$57.684.
Morgan Stanley shares closed at US$54.37 on Friday on the New York Stock Exchange. On Tuesday, the day before the investment bank announced results, its shares closed at US$48.07.
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