Dec 20 (Reuters) - Lender Morgan Stanley is discussing allocating a portion of its balance sheet into a new private credit fund that would include capital from external investors, Bloomberg News reported on Wednesday, citing people with knowledge of the matter.

The New York-based firm has held preliminary talks about injecting $1 billion to $2 billion of capital into the new vehicle, according to the report.

Morgan Stanley did not immediately respond to a Reuters' request for comment.

Earlier this year, JPMorgan Chase & Co set aside at least $10 billion to back its foray into the world of direct lending. (Reporting by Jaiveer Singh Shekhawat in Bengaluru; Editing by Shounak Dasgupta)