HSBC plans income opportunity CDs linked to global industry titans

By Angela McDaniels

Tacoma, Wash., Oct. 3 - HSBC Bank USA, NA plans to price annual income opportunity certificates of deposit with auto cap feature due Oct. 31, 2018 linked to a basket of stocks, according to a term sheet.

The basket includes the common stocks or American Depositary Receipts of ABB Ltd., Amgen Inc., Baidu, Inc., Barrick Gold Corp., BP plc, Canon Inc., Duke Energy Corp., Ecopetrol SA, Elan Corp plc, Grupo Televisa SA, HDFC Bank Ltd. and Marvell Technology Group Ltd.

The CDs will pay a coupon in October 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 7% to 10% 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 issuer said it is generally willing to repurchase CDs from depositors at any time. It will pay the current market value of the CDs minus an early withdrawal 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 years five through seven.

The CDs (Cusip 40431GZL6) will price Oct. 26 and settle Oct. 31.

HSBC Securities (USA) Inc. is the agent.

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