A 27-year-old Makaha man who admitted stabbing his neighbor last week is no longer facing a murder charge.

An Oahu grand jury returned an indictment yesterday charging Thomas C. Muscara with manslaughter and first-degree assault in the death last Wednesday of 51-year-old Johnny Walton Jr.

His bail is set at $200,000. Honolulu police had previously charged him with second-degree murder.

Muscara started an argument with Walton at the Makaha Valley Plantation condominium complex over a drug debt, said Vickie Kapp, deputy prosecutor. After Walton pulled out a knife, Muscara then pulled out his own knife and stabbed Walton in the arm, Kapp said.

The Honolulu Medical Examiner said Walton bled to death from a stab wound that severed blood vessels in the right arm.

Police said Muscara admitted stabbing Walton but claims he did it in self-defense. He told police Walton pulled a knife on him and swung it about five times.