Morgan Stanley (NYSE: MS) has launched an Exchange Traded Note linked to the Cushing MLP High Income Index (NYSE: MLPY).
“We are pleased to offer this high income ETN to our clients,” says Nikki Tippins, Head of Equity Derivatives Sales for the Americas at Morgan Stanley. “The MLP structure gives investors access to companies that operate in a market that has historically had high barriers to entry and growing distributions. We believe this ETN is differentiating in this space by referencing an index that both provides a diversified exposure to MLP issuers and whose constituents have had among the highest current yields. We anticipate launching more ETN products throughout the year.”
Exchange Traded Notes (ETNs) are senior, unsecured debt obligations of Morgan Stanley and are intended to provide access to various indices. The Morgan Stanley Cushing MLP High Income Index ETN tracks the performance of the Cushing MLP High Income Index. ETN quarterly coupon payments, if any, are linked to the cash distributions paid on the MLPs in the Index, less accrued tracking fees. The Morgan Stanley Cushing® MLP High Income Index ETNs have been approved for listing on NYSE Arca under the symbol “MLPY”.
The Cushing MLP High Income Index is a criteria-weighted index tracking the performance of 30 Master Limited Partnerships (MLPs) that hold energy infrastructure and related shipping assets in North America. The Index is a proprietary index developed by Cushing MLP Asset Management, LP, as Index sponsor, and maintained and calculated by Standard & Poor’s Financial Services LLC, a subsidiary of the McGraw-Hill Companies (S&P), as index calculation agent. The Index constituents are the MLPs having the highest current indicative yields among MLPs meeting certain criteria within the framework of a proprietary three-tiered weighting system.
MLPs are partnerships that trade on US public exchanges or markets. They are treated as partnerships rather than as corporations, so they generally do not pay federal or state income taxes.