HSBC plans income opportunity CDs linked to global industry titans

By Angela McDaniels

Tacoma, Wash., Nov. 29 - HSBC Bank USA, NA plans to price annual income opportunity certificates of deposit with auto cap feature due Dec. 30, 2016 linked to a basket of stocks, according to a term sheet.

The basket includes the common stocks of 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 December 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 Jan. 31. 2012, Jan. 31, 2013, Jan. 31, 2014, Jan. 30, 2015 and Jan. 29, 2016. 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.

The CDs (Cusip 40431GJF7) will price Dec. 28 and settle Dec. 31.

HSBC Securities (USA) Inc. is the agent.

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