HSBC plans seven-year CDs tied to 12 Morningstar wide moat stocks

By Toni Weeks

San Diego, Sept. 7 - HSBC Bank USA, NA plans to price annual income opportunity CDs with auto cap due Oct. 1, 2018 linked to a basket of 12 stocks, according to a term sheet.

The basket includes the common stocks of Amazon.com, Inc., Avon Products, Inc., Coca-Cola Co., Colgate-Palmolive Co., Exxon Mobil Corp., Intel Corp., Maxim Integrated Products, Inc., McDonald's Corp., Merck & Co., Inc., Pfizer Inc., Philip Morris International and Qualcomm Inc.

Interest is payable annually and will equal the average of the performances of the basket stocks, subject to a floor of zero.

If a basket stock's return is zero or positive, its performance will be fixed at 5.5% to 8.5%. The exact auto cap rate will be determined at pricing. If a basket stock's return is negative, its performance will be the greater of the stock return and negative 30%.

The payout at maturity will be par.

The CDs (Cusip: 40431GYJ2) are expected to price on Sept. 26 and settle Sept. 29.

HSBC Securities (USA) Inc. is the agent.

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