Morgan Stanley to price 5.25% Perqs linked to 20 stocks

By Jennifer Chiou

New York, Feb. 10 - Morgan Stanley is planning to price an issue of 5.25% Perqs (Performance Equity-linked Redemption Quarterly-pay Securities) that are mandatorily exchangeable for cash based on the performance of 20 stocks, according to a 424B2 filing with the Securities and Exchange Commission.

The notes will be due in March 2007.

Interest will be payable quarterly.

The equally weighted basket of 20 stocks includes Arkansas Best Corp., Acxiom Corp., Alliance Resource Partners, LP, Alltel Corp., Chesapeake Energy Corp., Dobson Communications Corp., Dillard's, Inc. (class A stock), Devon Energy Corp., Helmerich & Payne, Inc., J.B. Hunt Transport Services, Inc., Kerr-McGee Corp., Murphy Oil Corp., OGE Energy Corp., Oneok, Inc., Six Flags, Inc., Sonic Corp., Tyson Foods, Inc. (class A stock), Unit Corp., The Williams Cos., Inc. and Wal-Mart Stores, Inc.

The securities will be priced at par of $100.00 for a $5.00 fractional value of each basket stock.

Payout at maturity will be based on the performance of the 20 stocks over the term of the notes. If the final value of the basket is greater than the initial level, investors will receive par plus a gain based on the performance, capped at between 110% and 112%. Investors will share in losses.

Morgan Stanley is the underwriter.

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