Morgan Stanley SX5E Market-Linked Notes Promise Full Principal & Leveraged Gains
Rhea-AI Filing Summary
Morgan Stanley Finance LLC, guaranteed by Morgan Stanley, plans to issue market-linked notes tied to the EURO STOXX 50 Index (SX5E). The notes offer 114%-119% upside participation on any positive index performance observed on July 31 2029, with full principal repayment at maturity even if the index declines. Key terms include a $1,000 face value, pricing on July 31 2025, and maturity on August 3 2029 (4-year term). The preliminary estimated value is $958.80 (≈95.9% of face), reflecting issuance and hedging costs.
Key structural features
- No periodic coupons; all return realized at maturity.
- Amount payable depends solely on index level at the single observation date; interim movements are irrelevant.
- Notes will not be listed, and secondary liquidity may be limited.
- Credit exposure to Morgan Stanley; MS Finance LLC is a wholly owned funding vehicle without independent assets.
Principal risk highlights
- Investors may earn only principal if SX5E is flat or negative.
- The 4.1% issue-price premium versus estimated value creates negative yield if held to maturity without index appreciation.
- Market value can be volatile, influenced by MS credit spreads and trading in related instruments.
- Investors may incur taxable income annually under U.S. OID rules.
Overall, the product suits investors seeking European equity exposure with principal protection and are comfortable with MS credit risk and the lack of interim income.
Positive
- Full principal protection at maturity regardless of index performance provides downside mitigation.
- Enhanced upside participation (114%-119%) offers leveraged exposure relative to direct index investment.
Negative
- Estimated value of $958.80 reflects a 4.1% premium that reduces economic efficiency.
- Notes pay no periodic interest, creating negative carry versus traditional fixed-income instruments.
- Single observation date subjects investors to timing risk and potential underperformance.
- Illiquid secondary market and unlisted status may prevent efficient exit.
- Credit risk of Morgan Stanley could erode protection if the issuer defaults.
Insights
TL;DR: Principal-protected note with 114-119% upside; 4-year term; 4% issue premium implies negative carry absent index gains.
The note offers attractive headline participation versus typical 100-110% structures, but investors effectively pre-pay this via a $41.20 premium over model value. Compared with a zero-coupon U.S. Treasury yielding ~4%, the opportunity cost is material unless SX5E rises ~6% at maturity. Lack of interim coupons increases reinvestment risk, and a single observation date concentrates timing risk. Credit profile is investment-grade, but wider MS spreads would pressure secondary pricing. For Morgan Stanley, the issuance is routine funding with favorable economics. Overall impact on MS equity or debt valuation is negligible, while investors must balance principal protection against foregone yield.
TL;DR: Structured note delivers equity-linked upside, no downside, but liquidity and tax complexity temper appeal.
By tying returns to the EURO STOXX 50, purchasers gain diversified Eurozone exposure without currency risk (index quoted in EUR but note settled in USD). The 114-119% participation is competitive, yet capped by time value erosion embedded in the 4-year structure. Absence of listing means exit will occur at dealer bid-offer, typically 1-2% wide. From an asset-allocation lens, the product may replace a bond allocation while adding equity beta, albeit at the cost of taxable OID accruals. Strategic investors should model breakeven scenarios and compare to low-cost ETF alternatives plus risk-free assets.
Free Writing Prospectus to Preliminary Pricing Supplement No. 9,043
Registration Statement Nos. 333-275587; 333-275587-01
Dated July 1, 2025; Filed pursuant to Rule 433
Morgan Stanley
SX5E Market-Linked Notes due August 3, 2029
This document provides a summary of the terms of the notes. Investors must carefully review the accompanying preliminary pricing supplement referenced below, product supplement, index supplement and prospectus, and the “Risk Considerations” on the following page, prior to making an investment decision.
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Terms |
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Issuer: |
Morgan Stanley Finance LLC |
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Guarantor: |
Morgan Stanley |
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Underlier: |
EURO STOXX 50® Index (SX5E) |
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Participation rate: |
114% to 119% |
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Pricing date: |
July 31, 2025 |
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Observation date: |
July 31, 2029 |
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Maturity date: |
August 3, 2029 |
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CUSIP: |
61778NAL5 |
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Estimated value: |
$958.80 per note, or within $45.00 of that estimate |
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Preliminary pricing supplement: |
https://www.sec.gov/Archives/edgar/data/895421/000183988225034661/ms9043_424b2-18896.htm |
1All payments are subject to our credit risk
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Hypothetical Payment at Maturity1 The payoff diagram and table below illustrate the payment at maturity for a range of hypothetical performances of the underlier over the term of the notes.
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% Change in Closing Level of the Underlier |
Payment at Maturity per Note |
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+60.00% |
$1,684.00* |
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+40.00% |
$1,456.00* |
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+20.00% |
$1,228.00* |
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0.00% |
$1,000.00 |
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-20.00% |
$1,000.00 |
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-40.00% |
$1,000.00 |
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-60.00% |
$1,000.00 |
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-80.00% |
$1,000.00 |
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-100.00% |
$1,000.00 |
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*Assumes a participation rate of 114% |
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The issuer has filed a registration statement (including a prospectus) with the SEC for the offering to which this communication relates. Before you invest, you should read the prospectus in that registration statement and other documents the issuer has filed with the SEC for more complete information about the issuer and this offering. You may get these documents for free by visiting EDGAR on the SEC Web site at www.sec.gov. Alternatively, the issuer, any underwriter or any dealer participating in the offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-584-6837.
Underlier(s)
For more information about the underlier(s), including historical performance information, see the accompanying preliminary pricing supplement.
Risk Considerations
The risks set forth below are discussed in more detail in the “Risk Factors” section in the accompanying preliminary pricing supplement. Please review those risk factors carefully prior to making an investment decision.
Risks Relating to an Investment in the Notes
●The notes may not pay more than the stated principal amount at maturity.
●The notes do not pay interest.
●The amount payable on the notes is not linked to the value of the underlier at any time other than the observation date.
●The market price of the notes may be influenced by many unpredictable factors.
●The notes are subject to our credit risk, and any actual or anticipated changes to our credit ratings or credit spreads may adversely affect the market value of the notes.
●As a finance subsidiary, MSFL has no independent operations and will have no independent assets.
●The rate we are willing to pay for securities of this type, maturity and issuance size is likely to be lower than the rate implied by our secondary market credit spreads and advantageous to us. Both the lower rate and the inclusion of costs associated with issuing, selling, structuring and hedging the notes in the original issue price reduce the economic terms of the notes, cause the estimated value of the notes to be less than the original issue price and will adversely affect secondary market prices.
●The estimated value of the notes is determined by reference to our pricing and valuation models, which may differ from those of other dealers and is not a maximum or minimum secondary market price.
●The notes will not be listed on any securities exchange and secondary trading may be limited.
●As discussed in more detail in the accompanying product supplement, investing in the notes is not equivalent to investing in the underlier(s).
●You may be required to recognize taxable income on the notes prior to maturity.
Risks Relating to the Underlier(s)
●Because your return on the notes will depend upon the performance of the underlier(s), the notes are subject to the following risk(s), as discussed in more detail in the accompanying product supplement.
oAdjustments to an underlying index could adversely affect the value of the notes.
oThere are risks associated with investments in securities linked to the value of foreign equity securities.
Risks Relating to Conflicts of Interest
●The calculation agent, which is a subsidiary of Morgan Stanley and an affiliate of MSFL, will make determinations with respect to the notes.
●Hedging and trading activity by our affiliates could potentially adversely affect the value of the notes.
Tax Considerations
You should review carefully the discussion in the accompanying preliminary pricing supplement under the caption “Additional Information About the Notes–United States federal income tax considerations” concerning the U.S. federal income tax consequences of an investment in the notes, and you should consult your tax adviser.
FAQ
What is the participation rate on Morgan Stanley's SX5E Market-Linked Notes?
Is the principal protected on these MS (symbol: MS) notes?
When do the Morgan Stanley notes mature and what is the observation date?
Why is the estimated value only $958.80 for a $1,000 note?
Do the notes pay any coupons or interest?
What risks should investors consider before buying the MS SX5E notes?
