HSBC plans annual income CDs with rising floor linked to 10 stocks

By Marisa Wong

Madison, Wis., Dec. 17 - HSBC Bank USA, NA plans to price annual income opportunity certificates of deposit with rising floor rate feature due Dec. 26, 2019 linked to a basket of 10 stocks, according to a pricing sheet.

The basket includes the common stocks of Apple Inc., Amgen Inc., Exelon Corp., Altria Group Inc., Monsanto Co., Maxim Integrated Products, Pfizer Inc., Silver Wheaton Corp., AT&T Inc. and Wells Fargo & Co.

Interest is payable annually and will equal the average of the performances of the basket stocks, subject to a floor of 0%.

If a basket stock's return is zero or positive, its performance will equal the auto cap rate, which is expected to be at least 5.75% and will be set at pricing. If a basket stock's return is negative, its performance will be the greater of the stock return and the floor rate. The floor rate is initially negative 25% and rises by 3% each year to a floor rate of negative 7% in year seven.

The payout at maturity will be par.

The securities may be redeemed early, subject to an early withdrawal charge of 3% in year one, 2% in year two and 1% in year three. There is no early withdrawal charge for years four through seven.

The CDs (Cusip: 40431G4P1) are expected to price on Dec. 20 and settle on Dec. 26.

HSBC Securities (USA) Inc. will be the agent. Advisors Asset Management, Inc. is the distributor.

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