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

By Angela McDaniels

Tacoma, Wash., Jan. 5 - HSBC Bank USA, NA plans to price 0% knock-out barrier certificates of deposit due Jan. 26, 2016 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 145% to 155% 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 8%.

The CDs will be putable on Jan. 31, 2012, Jan. 31, 2013, Jan. 31, 2014 and Jan. 30, 2015. Investors will receive the current market value of the CDs minus a redemption charge of 3% in year one, 2% in year two and 1% in year three. There is no charge after year three.

The CDs (Cusip: 40431GKF5) will price Jan. 21 and settle Jan. 26.

HSBC Securities (USA) Inc. is the agent.

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