HSBC USA to issue 20% down & in worst of reverse convertibles linked to three Chinese stocks

By Laura Lutz

Des Moines, Aug. 31 - HSBC USA Inc. plans to price 20% annualized down & in worst of reverse convertible notes due Sept. 17, 2008 linked to a basket of Chinese stocks, according to an FWP filing with the Securities and Exchange Commission.

Interest will be payable monthly.

The basket consists of American depositary shares representing the common stock of China Life Insurance Co. Ltd., China Mobile Ltd. and PetroChina Co. Ltd.

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 - 75% 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 Sept. 14 and settle on Sept. 19.

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

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