HSBC to price income opportunity CDs linked to global industry titans

By Angela McDaniels

Tacoma, Wash., Nov. 1 - HSBC Bank USA, NA plans to price annual income opportunity certificates of deposit with auto cap feature due Nov. 29, 2016 linked to a basket of stocks, according to a term sheet.

The basket includes Banco Bradesco SA, China Mobile Ltd., Duke Energy Corp., Encana Corp., Goldcorp. Inc., Home Depot Inc., Honda Motor Co. Ltd., Lorillard Inc., Novartis AG, Toronto-Dominion Bank, Total SA and Unilever NV.

The CDs will pay a coupon in November of each year equal to the average of the basket stocks' component returns, subject to a minimum of zero.

If a basket stock's underlying return is flat or positive, its component return will equal the auto cap rate, which is expected to be 6% to 9% and will be set at pricing. Otherwise, its component return will be the greater of its underlying return and negative 30%.

The payout at maturity will be par.

The CDs will be putable on Dec. 30, 2011, Dec. 31, 2012, Dec. 31, 2013, Dec. 31, 2014 and Dec. 31, 2015. Investors will receive the current market value of the CDs minus a redemption charge 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 charge in year five.

The CDs (Cusip 40431GHD4) will price Nov. 23 and settle Nov. 29.

HSBC Securities (USA) Inc. is the agent.

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