HSBC USA to issue 22.5% down & in worst of reverse convertibles linked to homebuilders

By Susanna Moon

Chicago, Oct. 2 - HSBC USA Inc. plans to price 22.5% down & in worst of reverse convertible notes due Oct. 31, 2008 linked to a basket of stocks, according to an FWP filing with the Securities and Exchange Commission.

The underlying stocks are D.R. Horton, Inc., Pulte Homes, Inc., Lennar Corp., Toll Brothers, Inc. and Centex Corp.

Interest will be payable monthly.

The payout will depend on the performance of the reference stocks. At maturity, investors will receive par unless any stock falls below the protection price - 50% of its initial share price - during the life of the notes and the worst-performing stock finishes below its initial share price, in which case the payout will be a number of the worst-performing stock equal to $1,000 divided by its initial price.

The notes are expected to price on Oct. 26 and settle on Oct. 31.

HSBC Securities (USA) Inc. will be the agent.

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