HSBC plans annual income opportunity CDs linked to U.S. stock basket

By Angela McDaniels

Tacoma, Wash., July 1 - HSBC Bank USA, NA plans to price annual income opportunity certificates of deposit due July 31, 2015 linked to a basket of stocks, according to a term sheet.

The basket includes Abbott Laboratories, Amgen Inc., General Electric Co., Kimberly-Clark Corp., Medtronic Inc., Nike Inc., Schlumberger Ltd., Target Corp., Walgreen Co. and Yahoo! Inc.

Interest is payable in July of each year and will equal the average of the returns on the basket stocks, subject to a floor of zero. Each stock's return will be capped at 11% to 15%, with the exact cap to be set at pricing.

The payout at maturity will be par.

The CDs will be putable on July 26, 2010, July 26, 2011, July 26, 2012, July 26, 2013 and July 28, 2014. The redemption amount will be the current market value of the CDs minus an early redemption fee of 3.5% in year one, 2.5% in year two, 1.5% in year three and 0.5% in year four. There is no fee in year five.

The CDs will price July 28 and settle July 31.

HSBC Securities (USA) Inc. is the agent. Advisors Asset Management is the distributor.

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