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

By Angela McDaniels

Tacoma, Wash., June 2 - HSBC Bank USA, NA plans to price 0% barrier multi-coupon opportunity certificates of deposit due June 25, 2014 linked to the Russell 2000 index, according to a term sheet.

The CDs will pay a coupon in June 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, no coupon will be paid.

The barrier will be 115% to 120% of the initial index level for the first year and will increase to 125% of the initial level in the second year, to 135% in the third year and to 140% in the fourth year. The exact barrier for the first year will be set at pricing.

The payout at maturity will be par.

The CDs will be putable on June 27, 2011, June 25, 2012 and June 30, 2013. Investors will receive the market value of the CDs minus a redemption charge of 2% in year one and 1% in year two. There is no charge in years three or four.

The CDs (Cusip: 40431GAY5) will price June 22 and settle June 25.

HSBC Securities (USA) Inc. is the agent.

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