Terms

Series

Floating Rate Non-Cumulative Preferred Stock, Series 5

Liquidation Preference

$25.00

Rate Type

Floating

Payment Frequency

Quarterly

Cumulative

No

Perpetual

Yes

Convertible

No

Callable

Yes

First Call Date

May 21, 2012

First Call Price

$25.00

Redemption Notice Period

30 days

Capital Stack Ranking

Junior To: All Debt Obligations Of Merrill Lynch & Co., Inc.; Pari Passu With: Floating Rate Non-Cumulative Preferred Stock Series 1, Floating Rate Non-Cumulative Preferred Stock Series 2, Floating Rate Non-Cumulative Preferred Stock Series 4, 6.375% Non-Cumulative Preferred Stock Series 3; Senior To: Common Stock

Tax Classification

Qualified Dividend

Qualifies for QDI

Yes

Qualifies for DRD

Yes

Depositary Share Fraction

0.000833

Shares Offered

60,000,000

Prospectus Summary

This offering consists of 60,000,000 depositary shares issued by Merrill Lynch & Co., Inc., each representing a 1/1200th interest in a share of its Floating Rate Non-Cumulative Preferred Stock, Series 5, with a liquidation preference of $25 per depositary share. The dividend rate floats at three-month USD LIBOR plus 50 basis points, subject to a 4.00% per annum floor, paid quarterly on February 21, May 21, August 21, and November 21. The stock is non-cumulative, meaning that if the board of directors does not declare a dividend for any quarter, that dividend is permanently forfeited and cannot be accrued or paid in a future period — a meaningful risk for income investors. The shares are callable at $25 on or after May 21, 2012. As a preferred stock of the holding company ML&Co., these depositary shares rank senior to ML&Co.'s common stock and on parity with its other outstanding preferred series (Series 1, 2, 3, and 4). However, they are structurally subordinated to all of ML&Co.'s debt obligations, including senior and subordinated notes. Because this is a holding company issuance — not a direct obligation of Merrill Lynch's operating broker-dealer subsidiaries — holders depend on upstream dividends from subsidiaries for payment, adding a layer of structural subordination risk. No regulatory capital call provision is described in this term sheet, though investors should review product supplement PS-1 for any such provisions. At issuance, the initial dividend rate is 5.85% per annum for the stub period ending May 21, 2007; thereafter the rate resets quarterly at three-month LIBOR plus 50 bps, with a 4.00% floor providing downside protection. Dividends from ML&Co., a C-corporation, are generally expected to qualify for the preferential 15%/20% qualified dividend income (QDI) rate for individual investors and the dividends-received deduction (DRD) for corporate holders, though this is not explicitly confirmed in the term sheet. No dividend stopper clause is detailed here; investors should consult PS-1 for full provisions. Missed non-cumulative dividends are forfeited with no future recovery obligation.

Summarized from the SEC prospectus filing.

Distribution History

Floating Rate Terms

Ranking vs. Other Preferreds

Dividend Stopper Provisions

Dividend Stopper Description

No explicit dividend stopper clause is described in this term sheet; full provisions are in product supplement PS-1. As a non-cumulative issue, missed dividends are forfeited permanently.

Div Score Breakdown

Reinvesty's multi-factor safety analysis for this preferred, composite score: 75 (Strong)