New Issue: Morgan Stanley sells $40 million 9% Sparqs exchangeable for Valero Energy

By Jennifer Chiou

New York, May 25 - Morgan Stanley priced a $40 million issue of 9% Sparqs (Stock Participation Accreting Redemption Quarterly-pay Securities) due June 20, 2007 mandatorily exchangeable for Valero Energy Corp. stock, according to a 424B2 filing with the Securities and Exchange Commission.

Issuer:	Morgan Stanley
Issue:	Sparqs (Stock Participation Accreting Redemption Quarterly-pay Securities) senior medium-term series F notes
Underlying stock:	Valero Energy Corp.
Amount:	$40,000,022.775
Maturity:	June 20, 2007
Coupon:	9%, payable quarterly
Price:	Par of $29.345 (equal to half of closing price of Valero stock on pricing date)
Exchange ratio:	0.5 (mandatory, at maturity)
Call:	Dec. 20, 2006 onwards at price to give yield to call of 24%
Pricing date:	May 23
Settlement date:	May 31
Underwriter:	Morgan Stanley
Listing:	"SVE" on American Stock Exchange

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