HSBC plans seven-year annual income notes linked to stock basket

By Susanna Moon

Chicago, Nov. 9 - HSBC USA Inc. plans to price annual income opportunity notes with auto cap due Nov. 27, 2019 linked to a basket of 10 common stocks, according to a 424B2 filing with the Securities and Exchange Commission.

The underlying companies are Altria Group Inc., Bristol-Myers Squibb Co., Cisco Systems Inc., CME Group Inc., Kinder Morgan Energy Partners, Lockheed Martin Corp., Maxim Integrated Products Inc., McDonald's Corp. and Wal-Mart Stores Inc.

Interest is payable annually and will equal the average of the performances of the basket stocks, with a minimum coupon of zero.

A stock's performance will be equal to the auto cap rate of at least 5.5% if its return is greater than or equal to zero. If a stock's return is less than zero, its performance will be the greater of its return and negative 25% for the first year, stepping down to negative 22% in year two, to negative 19% in year three, to negative 16% in year four, to negative 13% in year five, to negative 10% in year six and to negative 7% after that.

The payout at maturity will be par.

HSBC Securities (USA) Inc. is the agent.

The notes will price on Nov. 21 and settle on Nov. 27.

The Cusip number is 40431G4D8.

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