HSBC plans 8% STEP Income Securities tied to Honeywell via Merrill

By Marisa Wong

Madison, Wis., Nov. 10 - HSBC USA Inc. plans to price 8% STEP Income Securities due December 2012 linked to Honeywell International Inc. shares, according to an FWP filing with the Securities and Exchange Commission.

Interest will be payable quarterly.

If Honeywell stock finishes at or above the step level - 108% of the initial share price - the payout at maturity will be par of $10 plus the step payment of 1% to 5%. The exact step payment will be set at pricing.

If the stock finishes below the step level but at or above the threshold level - 95% of the initial price - the payout will be par.

Otherwise, investors will be exposed to any decline in the share price beyond 5%.

The notes are expected to price and settle in November.

Bank of America Merrill Lynch is the agent.

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