Morgan Stanley is in talks with lenders to obtain a reduced credit backstop for its commercial paper after cutting the outstanding short-term debt to $16 billion at the end of March from an average of $25.3 billion last year, spokesman Mark Lake said.
``We do not need the amount of backup credit lines that we had previously,'' said Lake, declining to comment further on the loan negotiations. Morgan Stanley also boosted its pool of cash and liquid assets to $123 billion on average in the first quarter from $85 billion in 2007, he said.
The New York-based investment bank is seeking $7.5 billion to replace $11 billion of credit that expires on April 16, Reuters reported earlier today, citing unidentified sources close to the situation. Lenders are only willing to extend about $4.9 billion, Reuters said. JPMorgan Chase & Co. is arranging the financing.
Brian Marchiony, a spokesman for JPMorgan in New York, declined to comment.
Morgan Stanley fell 45 cents, or 1 percent, to $45.23 at 12:11 p.m. in New York Stock Exchange composite trading. The shares are down about 15 percent this year. The firm said March 19 that first-quarter earnings declined 42 percent to $1.55 billion, a less-severe drop than analysts had estimated. The company's profit and return on equity exceeded those of rivals Goldman Sachs Group Inc. and Lehman Brothers Holdings Inc
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