HSBC to price five-year knock-out barrier CDs linked to S&P 500

By Jennifer Chiou

New York, Oct. 4 - HSBC Bank USA, NA plans to price 0% knock-out barrier certificates of deposit due Oct. 23, 2015 linked to the S&P 500 index, according to a term sheet.

If the index remains at or below the knock-out barrier throughout the life of the CDs, the payout at maturity will be par plus the index return, subject to a floor of par. The knock-out barrier is expected to be 140% to 150% of the initial level and will be set at pricing.

If the index closes above the barrier during the life of the CDs, the payout at maturity will be par plus 6%.

The CDs will be putable on Oct. 31, 2011, Oct. 31, 2012, Oct. 31, 2013 and Oct. 31, 2014. Investors will receive the current market value of the CDs minus 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 years four of five.

The CDs (Cusip: 40431GFN4) will price on Oct. 20 and settle on Oct. 25.

HSBC Securities (USA) Inc. is the agent.

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