HSBC Bank to sell "all up" CDs with minimum coupon tied to five stocks

By Marisa Wong

Madison, Wis., Nov. 29 - HSBC Bank USA, NA plans to price "all up" principal-protected certificates of deposit due Dec. 30, 2016 with minimum payment guarantee in year one linked to a basket of five common stocks, according to a term sheet.

The basket includes Home Depot, Inc., Kraft Foods Inc., McDonald's Corp., Merck & Co. and Verizon Communications Inc.

Interest will be payable in December of each year. The coupon will be equal to the guaranteed minimum rate of 1% for the first year. After that, if each stock closes above its initial share price on the applicable coupon valuation date, the coupon will be the guaranteed minimum rate plus 6% to 8%, with the exact percentage to be set at pricing. Otherwise, the coupon will be the guaranteed minimum rate.

The payout at maturity will be par.

The CDs are putable on Jan. 31, 2012, Jan. 31, 2013, Jan. 31, 2014, Jan. 30, 2015 and Jan, 29, 2016. There will be an early redemption charge of 3.5% for year one, 2.5% for year two, 1.5% for year three and 0.5% for year four. There is no redemption charge for years five and six.

The CDs (Cusip: 40431GHT9) are expected to price on Dec. 27 and settle on Dec. 30.

HSBC Securities (USA) Inc. is the agent.

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