New Issue: Morgan Stanley prices $8 million 0% notes inversely linked to PHLX housing index

By Jennifer Chiou

New York, Jan. 25 - Morgan Stanley priced $8 million of 0% Bear Market Performance Leveraged Upside Securities due April 20, 2007 inversely linked to the PHLX Housing Sector Index, according to an FWP filing with the Securities and Exchange Commission.

At maturity, if the index finishes below its initial value investors will receive par plus three times the absolute value of the decrease, capped at a total payment $6.625 per $5.00. If the final index level is greater than the initial level, investors will receive par minus the gain, with a floor of 25%.

Issuer:	Morgan Stanley
Issue:	Bear Market Performance Leveraged Upside Securities
Underlying index:	PHLX Housing Sector Index
Amount:	$8 million
Maturity:	April 20, 2007
Coupon:	0%
Price:	Par of $5.00
Initial index level:	532.85
Payout at maturity:	If index declines, par plus three times the absolute value of the decrease in the value of the index, capped at a total of $6.625 per $5.00. If the final index level is greater than the initial level, investors will receive par minus the gain, with a floor of 25%
Agent:	Morgan Stanley
Pricing date:	Jan. 24
Settlement date:	Jan. 31
Stock symbol:	AMEX: MFP

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