Jan. 30 (Bloomberg) -- Morgan Stanley, the second-biggest U.S. securities firm, wrote down $169 million after helping its money funds by taking on bonds issued by structured investment vehicles.

Morgan Stanley bought $1.06 billion of SIV bonds, including $160 million since Dec. 1, the New York-based firm said in a filing yesterday with U.S. Securities and Exchange Commission.

Banks and money managers bailed out money funds that bought debt from SIVs after losses caused by the collapse of the U.S. subprime mortgage market threatened to push their value below 100 cents on the dollar, known as ``breaking the buck.'' SIVs, which use short-term borrowing to invest in higher-yielding securities, have cut their holdings by more than $100 billion from a peak of $400 billion last year, according to Moody's Investors Service.

``In 2007, widespread illiquidity in the commercial paper market led to market value declines and rating agency downgrades of many securities issued by SIVs, some of which were held by the funds,'' Morgan Stanley said in the filing. The firm wasn't obliged to buy any of the securities and has no obligation to do so in the future, it said.

Bank of America Corp. in Charlotte, North Carolina, and Baltimore-based Legg Mason Inc. are among firms that have rescued money market funds that lost money from investments in securities sold by SIVs.

Morgan Stanley bought $900 million of SIV debt from money funds in the year ending Nov. 30, booking losses of $129 million on the notes, according to the filing. The firm wrote down $40 million on notes it bought since then.

Morgan Stanley didn't provide details of the money funds that it purchased the SIV debt from.

To contact the reporter on this story: Neil Unmack in London at nunmack@bloomberg.net

Last Updated: January 30, 2008 05:37 EST