Morgan Stanley to price HITS exchangeable for XM Satellite Radio

By Angela McDaniels

Seattle, Feb. 24 - Morgan Stanley will price an issue of HITS (High Income Trigger Securities) due April 20, 2007 that are exchangeable for XM Satellite Radio Holdings Inc. stock, according to an FWP filing with the Securities and Exchange Commission.

The coupon is talked at 11.15% to 12.15%, and interest will be payable quarterly.

The global medium-term series F notes will be priced at par of $10.00.

Payout at maturity will be based on the performance of XM Satellite Radio stock up to and including April 18, 2007, the determination date:

• If the stock price has not decreased below the trigger level, 65% of the initial share price, investors will receive par in cash.

• If the stock price has dropped below the trigger price, investors will collect XM Satellite Radio shares at an exchange ratio equal to $10 divided by the initial share price.

Morgan Stanley said it will apply to list the notes on the American Stock Exchange under the symbol "XMM."

Morgan Stanley will be the agent for the offering.

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