HSBC ups coupon to 28.8% in issue of down & in worst of reverse convertibles linked to stock basket

By Laura Lutz

Des Moines, Aug. 7 - HSBC USA Inc. increased the coupon in its planned issue of down & in worst of reverse convertible notes due Feb. 28, 2008 linked to a basket of stocks, according to an FWP filing with the Securities and Exchange Commission.

The notes will now bear interest at 28.8% per year, up from 28.2% per year. Interest will be payable monthly.

The basket includes the common stock of Apple, Inc. and American Depositary Shares representing the common stock of Companhia Vale do Rio Doce, Petroleo Brasileiro SA (Petrobras) and Gerdau SA.

The payout will be determined according to the performance of all reference assets during the life of the notes. At maturity, investors will receive par unless any stock falls below its protection price - 80% 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 Aug. 24 and settle on Aug. 29. The issue was first announced in an FWP dated Aug. 6.

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

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