Morgan Stanley recently closed an innovative repackaging of impaired-aircraft ABS notes, issued through the bank's Combination Repackaged Asset Backed Securities II shelf, or CRABS II.

MS combined an interest portion from the A-9 notes of Airplanes Pass-Through Trust with zero-coupon Treasurys, which scores the new securities an A1' rating from Moody's Investors Service, compared to the Ba2' rating of the stand-alone A-9. The A-9 class, issued in March 2001 to refinance the existing A-4 and A-7 classes from the trust, was originally rated Aa2' by Moody's, noted Nicolas Weil, aircraft securitization analyst at the agency.

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