Morgan Stanley CDS rise to 28 pct upfront

NEW YORK, Oct 10 (Reuters) - The cost to insure Morgan Stanley's debt against debt default rose on Friday as world stocks fell and U.S. stock futures indicated another decline amid a deepening credit crisis.

Debt protection costs for Morgan Stanley (MS.N) rose as the bank's five year credit default swaps rose to an upfront payment of 28 percent the sum insured plus 500 basis points a year, from 19 percent on Thursday, according to Phoenix Partners Group.

That means it would cost $2.8 million to insure $10 million of debt plus $500,000 a year.

Typically swaps start trading on an upfront basis when spreads approach about 1,000 basis points, meaning insurance is sold at an annual 10 percent payment of the debt's face value over a five-year period. (Reporting by Walden Siew; Editing by Theodore d'Afflisio)