Americas Structured Equity House: Morgan Stanley
Growth spurt
US corporate issuers leaned into the equity-linked market in 2025 as an alternative to straight debt or out of pure opportunism. Morgan Stanley was front and centre in this historic financing binge and is IFR’s Americas Structured Equity House of the Year.
US companies crowded into the convertible bond market in 2025 to effectively sell stock above all-time highs, underpinned by equity derivatives and realised hyper-volatility to drive deal economics.
Hims & Hers Health, an online healthcare products retailer, in May took in US$1bn from the sale of a five-year CB with a zero coupon and a capped call derivative purchased to offset dilution up to US$89.95, a 75% premium to the US$51.40 reference price and compared to the US$70.67 at which investors are eligible to convert, a 37.5% premium.
Morgan Stanley, as lead-left bookrunner, launched Hims’ CB at US$450m with guidance of 0.25%–0.75% for the coupon, up 27.5%–32.5%, before pushing way beyond price talk and maximising size as investor demand swelled. The bank guided accounts to a credit spread of SOFR plus 350bp and vol of 50.
The capped call, whereby the CB’s embedded call option is repurchased and warrants are sold at a higher strike, made this an opportunistic financing for Hims at a time of aggressive expansion.
“The capped call business has been a huge product this year. It’s about as aggressive as I can ever remember,” said Joel Carter, Morgan Stanley's Americas head of convertible debt and equity solutions. “There are 20 banks that compete for almost every capped call auction.”
While Morgan Stanley competes for capped calls, it is content to let other banks have that business to meet client needs.
Issuer demand for capped calls played into Morgan Stanley’s strength in technology investment banking.
Morgan Stanley earned US$15bn of league table credit across 39 transactions, giving it an 18.2% share of the US$82.5bn of CBs issued in the IFR Awards period. That league-table-leading performance is a remarkable turnaround from the 18 deals and US$3bn (5.4% share) of business the bank transacted in 2024, according to LSEG data.
Of the 45 zero-coupon CBs priced in the period, Morgan Stanley was a bookrunner on 24. And of the 39 CB issues it was involved in, 28 used a capped call; while it was not lead-left in all instances, the statistics illustrate the prevalence of zeros and capped calls and Morgan Stanley's standing in those.
In June, the bank helped US cybersecurity specialist Cloudflare raise US$2bn from the sale of a zero-coupon CB that incorporated a capped call to offset dilution up to a 175% premium, among the highest ever and compared with the 45% premium at pricing.
“You have to find the right pricing volatility relative to observed volatility, which frankly requires a ton of judgment,” said Arnaud Blanchard, one of three co-heads of ECM globally at Morgan Stanley.
The boom in zero-coupon CB issuance particularly benefited Israeli companies, given the need to withhold taxes owed by foreign investors on interest income. Building on the strongest IB practice in the country, Morgan Stanley was a bookrunner on all five Israeli zero-coupon CBs issued by Camtek, CyberArk Software, Nova, Oddity Tech and Wix.com.
Derive and conquer
Morgan Stanley’s derivative expertise extends beyond the pure vol of bidding out capped calls.
For Solaris Energy Infrastructure, a company transitioning from oilfield services to a distributed power supplier of AI data centres, the bank used a delta share placement to help facilitate a US$155m five-year CB in May priced at a 4.75% coupon and 35% conversion premium, helping to reopen the market after the US imposed tariffs.
In October, Solaris returned with a larger, longer-dated US$747.5m 0.25% six-year CB with a capped call to refinance higher-cost bank debt.
Morgan Stanley provided similar fixed income alternatives to regulated utilities, highlighted by a two-part US$2.5bn CB for FirstEnergy in June to refinance legacy debt and stagger maturities in 2029 and 2031.
Crypto, an area the bank had shied away from, figured prominently in 2025. Morgan Stanley was lead-left bookrunner on bitcoin hoarder Strategy’s US$2bn zero-coupon CB in February, an impressive win having not been involved in the serial CB issuer’s prior financings. Bitcoin miners-turned-AI high-performance computing companies such as Cipher Mining, Mara and TeraWulf were other clients.