HSBC plans income plus CDs tied to stocks with 12.5% potential coupon

By Angela McDaniels

Tacoma, Wash., April 4 - HSBC Bank USA, NA plans to price income plus certificates of deposit due April 26, 2018 linked to a basket of common stocks, according to a term sheet.

The basket includes Home Depot, Inc., Kraft Foods, Inc., McDonald's Corp., Merck & Co., Inc. and Verizon Communications, Inc.

Interest will be payable annually. The interest rate will be (a) the performance-based annual coupon if each basket stock closes at or above its initial share price on the valuation date or (b) 0% otherwise. The performance-based annual coupon is expected to be at least 12.5% and will be set at pricing.

The payout at maturity will be par plus the last coupon payment, if any.

The CDs will be putable on May 31, 2012, May 31, 2013, May 30, 2014, May 29, 2015, May 31, 2016 and May 31, 2017. Investors will receive the current market value of the CDs minus an early redemption charge of 4% in year one, 3% in year two, 2% in year three or 1% in year four.

The CDs (Cusip: 40431GPV5) will price April 21 and settle April 27.

HSBC Securities (USA) Inc. is the agent.

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