HSBC plans Income Plus CDs tied to stocks with 5% potential coupon

By Angela McDaniels

Tacoma, Wash., Feb. 1 - HSBC Bank USA, NA plans to price Income Plus certificates of deposit due Feb. 28, 2019 linked to a basket of common stocks, according to a term sheet.

The basket includes the common stocks of AT&T Inc., Intel Corp., Kraft Foods Inc., Pfizer Inc. and Reynolds American Inc.

Interest will be payable annually. The interest rate will be 0.5% 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 4.5% and will be set at pricing.

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

The issuer said it is generally willing to repurchase CDs from depositors at any time. It will pay the early redemption amount, which equals par plus any interest due plus the early redemption fee and less an early withdrawal charge of 3.5% in year one, 2.5% in year two, 1.5% in year three, 0.5% in year four and zero after that. The early redemption fee is the current market value of the CDs minus any interest due and minus the principal amount of the CDs.

The CDs (Cusip: 40431GJ67) will price Feb. 23 and settle Feb. 28.

HSBC Securities (USA) Inc. is the agent.

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