Morgan Stanley Uses Capital Format Big Lenders Avoided for Years

Morgan Stanley is offering to sell a type of bank capital security that the country’s biggest lenders neglected for almost two years.

The bank is looking to raise $250 million through a perpetual preferred share issue on Tuesday that pays a fixed rate for life, according to a person familiar with the matter who asked not to be identified. The prospective issue, which targets retail investors with its $25 dollar chunks, is callable after five years.

This type of note has been a rarity among the so-called Big Six in recent years, as big lenders focused more on preferred issues ...