HSBC Bank plans six-year sector selector CDs linked to ETF basket

By Jennifer Chiou

New York, Nov. 2 - HSBC Bank USA, NA plans to price 0% sector selector certificates of deposit with minimum return due Nov. 25, 2015 linked to a basket of exchange-traded funds, according to a term sheet.

The basket includes the iShares MSCI Emerging Markets index fund, Market Vectors Gold Miners, Energy Select Sector SPDR fund, Financial Select Sector SPDR fund, Healthcare Select Sector SPDR fund and Semiconductor Holdrs Trust.

The payout at maturity will be par plus the sum of the locked-in returns, subject to a minimum return of 4%.

On Nov. 20 of each year, the fund that has experienced the highest return on that day will be selected and its return will be the locked-in return for that observation date, subject to a cap that is expected to be 8% to 11% and will be set at pricing. This fund will then be removed from the basket.

The CDs will be putable annually on the anniversary of the trade date. Investors will receive the then-current market value of the CDs minus an early redemption charge of 3% in the first year, 2% in the second year and 1% in the third year. There is no charge in years four, five and six.

The CDs are expected to price on Nov. 20 and settle Nov. 25.

HSBC Securities (USA) Inc. is the agent.

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