Fitch Affirms 10 & Places 2 RMBS Classes from Morgan Stanley 2006-5AR on Rating Watch Negative.

NEW YORK -- Fitch Ratings has taken rating actions on the Morgan Stanley 2006-5AR transaction:

Series 2006-5AR

--Class A affirmed at 'AAA';

--Class M-1 affirmed at 'AA+';

--Class M-2 affirmed at 'AA';

--Class M-3 affirmed at 'AA';

--Class M-4 affirmed at 'A+';

--Class M-5 affirmed at 'A';

--Class M-6 affirmed at 'A';

--Class M-7 affirmed at 'A-';

--Class M-8 affirmed at 'BBB+';

--Class M-9 affirmed at 'BBB';

--Class B-1 rated 'BB', placed on Rating Watch Negative;

--Class B-2 rated 'B', placed on Rating Watch Negative.

The mortgage loans consist of fixed- and adjustable-rate loans, extended to Alt-A borrowers and are secured by first liens, primarily on one- to four-family residential properties. As of the March 2007 distribution date, the transaction is seasoned 12 months and the pool factor (current mortgage loan principal outstanding as a percentage of the initial pool) is 77.41%. The loans are master serviced by Wells Fargo (rated 'RMS1' by Fitch)

The affirmations reflect a stable relationship between credit enhancement (CE) and future loss expectations and affect approximately $421.02 million of outstanding certificates. To date the trust has not suffered any realized losses.

The Rating Watch Negative actions reflect deterioration in the relationship between CE and loss expectations and affect $7.204 million in outstanding certificates. Fitch is currently seeking out more detailed performance-related data in order to better determine to what degree the transactions may be negatively impacted.

The transaction is currently experiencing 5.29% of serious delinquencies (defined as loans 60 days or more delinquent, including bankruptcy, foreclosure and real estate owned (REO)) with 3.32% representing foreclosures and REO, while the most subordinate bond (class B2) is protected by only 58 basis points (bps) of subordination, and the next most subordinate (class B1) is protected by only 129 bps of subordination.

Fitch will continue to closely monitor this transaction, if the CE becomes further threatened or begins to deteriorate, further actions may be necessary. Further information regarding current delinquency, loss, and credit enhancement statistics is available on the Fitch Ratings web site at www.fitchratings.com.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.