HSBC plans barrier multi-coupon opportunity CDs linked to Russell 2000

By Angela McDaniels

Tacoma, Wash., Nov. 2 - HSBC Bank USA, NA plans to price 0% barrier multi-coupon opportunity certificates of deposit due Nov. 24, 2014 linked to the Russell 2000 index, according to a term sheet.

The CDs will pay a coupon in November of each year. If the index remained at or below the barrier level throughout the previous year, the coupon will be equal to the greater of the index return and zero. If the index was ever above the barrier, the coupon will be equal to the rebate return.

The barrier is 115% of the initial index level for the first year and will increase to 125% of the initial level in the second year, 135% in the third year, 145% in the fourth year and 155% in the fifth year. The rebate return is expected to be 0.5% to 1% and will be set at pricing.

The payout at maturity will be par.

The CDs will be putable at the then-current market value on Nov. 29, 2010, Nov. 29, 2011, Nov. 29, 2012 and Nov. 29, 2013 subject to an early redemption charge of 2.5% in year one, 1.5% in year two and 0.5% in year three. There is no charge in year four.

The CDs are expected to price Nov. 19 and settle Nov. 24.

HSBC Securities (USA) Inc. is the agent.

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