Morgan Stanley to price 14%-16% RevCons linked to Gap

By E. Janene Geiss

Philadelphia, July 25 - Morgan Stanley plans to price reverse convertible securities (RevCons) due Feb. 13, 2009 linked to the common stock of the Gap, Inc., according to an FWP filing with the Securities and Exchange Commission.

The six-month notes are expected to have an annualized rate of 14% to 16%, with the exact coupon to be set at pricing. Interest will be payable monthly.

The payout at maturity will be par unless Gap stock closes below the trigger price - 80% of the initial share price - during the life of the notes and closes below the initial share price on the final determination date, in which case the payout will be a number of Gap shares equal to $1,000 divided by the initial share price or, at Morgan Stanley's option, the equivalent cash value.

The notes will price on Aug. 8 and settle on Aug. 13.

Morgan Stanley & Co. Inc. will be the agent.

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