HSBC plans income plus CDs tied to stocks with 7.5% potential coupon

By Angela McDaniels

Tacoma, Wash., May 2 - HSBC Bank USA, NA plans to price income plus certificates of deposit due May 30, 2018 linked to a basket of common stocks, according to a term sheet.

The basket includes five common stocks that have received a Morningstar Economic Moat rating of "Wide" as of April 19. They are Altria Group, Inc., Eli Lilly & Co., Lockheed Martin Corp., Johnson & Johnson and Procter & Gamble Co.

Interest will be payable annually. The interest rate will be 1% plus (a) the performance-based annual coupon if each basket stock closes at or above its initial share price on the valuation date or (b) 0% otherwise. The performance-based annual coupon is expected to be at least 6.5% and will be set at pricing.

The payout at maturity will be par plus the last coupon payment, if any.

The CDs will be putable annually. Investors will receive the current market value of the CDs minus an early redemption charge of 4% in year one, 3% in year two, 2% in year three and 1% in year four.

The CDs (Cusip: 40431GRV3) will price May 24 and settle May 27.

HSBC Securities (USA) Inc. is the agent.

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