Morgan Stanley to price 0% notes linked to S&P 500, Nikkei 225

By Jennifer Chiou

New York, Jan. 25 - Morgan Stanley plans to price an issue of Redeemable Equity-Linked Alternative Yield Securities (Relays) based on the S&P 500 index and Nikkei 225 index, according to a 424B2 filing with the Securities and Exchange Commission.

The 0% notes are due January 2010.

The payout will be based on the indexes' performance on any of three determination dates, at which time it is possible the notes will be redeemed. If both index closing values are greater than the initial index levels on a determination date: in January 2007, investors will receive 113.5%; in January 2008, investors will receive 127% or in January 2009, investors will receive 140.5%.

At maturity, if the notes have not been redeemed, investors will receive 154% if the final index levels are greater than the initial levels; par if the closing index value of either the S&P 500 or Nikkei 225 is less than or equal to the initial value; or an amount based on the index performance factor, which will be less than or equal to 1.0, if either index value is less than or equal to the initial value and the value of either index falls below a specified trigger level - 70% of the initial index value - at any time.

Morgan Stanley is the underwriter.

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