HSBC plans annual income opportunity CDs on global industry titans

By Marisa Wong

Madison, Wis., Oct. 4 - HSBC Bank USA, NA plans to price annual income opportunity certificates of deposit with auto cap feature due Oct. 31, 2016 linked to a basket of stocks, according to a term sheet.

The basket includes the common stocks of China Mobile Ltd., CIA Siderurgica NACL, Duke Energy Corp., Encana Corp., Goldcorp. Inc., Home Depot Inc., Honda Motor Co. Ltd., Lorillard Inc., Novartis AG, Toronto-Dominion Bank, Total SA and Unilever NV.

Interest is payable annually and will equal the average of the performances of the basket stocks, subject to a floor of zero.

If a basket stock's return is zero or positive, its performance will be fixed at 6% to 9%. The exact auto cap rate will be set at pricing. If a basket stock's return is negative, its performance will be the greater of the stock return and negative 30%.

The payout at maturity will be par.

The CDs will be putable on Nov. 30, 2011, Nov. 30, 2012, Nov. 29, 2013, Nov. 28, 2014 and Nov. 30, 2015. Investors will receive the current market value of the CDs minus an early redemption charge of 3.5% in year one, 2.5% in year two, 1.5% in year three and 0.5% in year four. There is no charge for year five.

The CDs (Cusip: 40431GFV6) will price Oct. 26 and settle Oct. 29.

HSBC Securities (USA) Inc. is the agent.

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