HSBC plans notes linked to Far East basket; NutriSystem dives, rebounds after CreditSuisse notes price

By Sheri Kasprzak

New York, Feb. 5 - HSBC USA Inc. led structured products news to kick off the week, announcing plans to price Far East equity buffer notes linked to a basket of Asian indexes.

"Asian stocks are reaching record highs and so there is a great deal of [investor] interest right now," said one market source when asked about the index offering Monday.

With regard to the indexes themselves, the market source noted that the Nikkei 225 in particular has been "gaining ground at an alarming rate."

The Nikkei, in fact, is a popular index looking ahead.

JPMorgan Chase & Co. intends to price 0% buffered return enhanced notes linked to the Nikkei on Feb. 9, Deutsche Bank, London Branch plans to price 0% performance securities linked to the index on Feb. 22 and UBS AG will price 0% return optimization securities linked to the Nikkei on Feb. 22. The index is also popular among basket offerings as well.

HSBC offering details

The notes in the HSBC basket are linked to the Nikkei, the Hong Kong Hang Seng China Enterprises, the MSCI Tawian and the MSCI Singapore Free indexes.

At maturity, the notes pay par plus 120% of any basket return with investors sharing in any losses beyond 20%.

The deal is set to price Feb. 23.

Back in December 2006, HSBC priced five-year certificates of deposit linked to the same indexes.

Nutri/System's stock dives, rebounds

In reverse convertibles, Nutri/System, Inc.'s stock plunged Friday, falling below the trigger price on a new $1 million offering of notes from CreditSuisse (USA), Inc. that were priced only the preceding Monday.

However, after breaking through the threshold, the reference stock made a comeback Monday, helped by positive market sentiment from the bid to acquire Herbalife Ltd. made by Whitney V LP and its affiliates, according to market sources.

The Credit Suisse notes were priced with a 17.25% coupon and a knock-in price of $43.38, 75% of the initial value.

On Friday, NutriSystem's stock sank 34 cents to close at $43.20 (Nasdaq: NTRI). Monday the stock advanced by $1.04 to close at $44.24. The stock gave up 9 cents in after-hours trading.

Under the terms of the offering, investors could expect to receive par at maturity unless, during the life of the notes, the stock falls below the knock-in price and finishes below its initial price of $43.54 on the valuation date - May 1, 2007. The investors can expect to receive a number of Nutri/System shares equal to $1,000 divided by the initial share price.

However on Thursday, Credit Suisse followed up with another Nutri/System-linked deal, this time with an 18.855 coupon and a trigger price of $30.478, 70% of the $43.54 initial price.

Hartford prices $490,000 in notes

Elsewhere in structured products, insurance company Hartford Life Insurance Co. negotiated the terms of $490,000 in zero-coupon principal-protected notes linked to the S&P 500 index.

The six-year notes pay par plus any gain on the index multiplied by the participation rate of 104%.

The investors can expect to receive at least par at maturity.

Bear, Stearns & Co. Inc. was lead agent on the deal, which also had A.G. Edwards & Sons Inc.; Banc of America Securities LLC; Charles Schwab & Co. Inc.; Citigroup; Fidelity Capital markets Services; Merrill Lynch & Co.; Morgan Stanley; Piper Jaffray & Co.; Raymond James; RBC Dain Rauscher Inc.; Scott & Stringfellow Inc.; UBS Investment Bank; and Wachovia Securities in the syndicate.

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