HSBC to price annual income opportunity CDs on Emerging Market Explorers stock basket

By Marisa Wong

Madison, Wis., July 6 - HSBC Bank USA, NA plans to price annual income opportunity certificates of deposit due July 29, 2016 linked to an Emerging Market Explorers Series basket of stocks, according to a term sheet.

The equally weighted basket includes the stocks and ADRs of exploration companies based in South Africa, Israel, Turkey, Russia, India and China. It is comprised of the ADRs of Anglogold Ashanti, Baidu Inc., Gold Fields Ltd., Harmony Gold Mining, Icici Bank Ltd., Teva Pharmaceutical, Turkcell Iletism Hizmet, Tata Motors Ltd. and Yingli Green Energy Holding, as well as the stock of Check Point Software Tech, Infosys Technologies Ltd. and Mobile Telesystems.

Interest is payable in July of each year and will equal the average of the returns of the basket components, with a floor of zero.

The return of each stock will be subject to a floor of negative 30% and a cap of 7% to 11%. The exact cap will be set at pricing.

The payout at maturity will be par.

The CDs will be putable on Aug. 31, 2011, Aug. 31, 2012, Aug. 30, 2013, Aug. 29, 2014 and Aug. 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: 40431GCE7) will price July 26 and settle July 29.

HSBC Securities (USA) Inc. is the agent.

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