HSBC plans five-year income opportunity CDs on U.S. industry titans

By Jennifer Chiou

New York, Feb. 2 - HSBC Bank USA, NA plans to price annual income opportunity certificates of deposit with auto cap feature due Feb. 26, 2016 linked to a basket of stocks, according to a term sheet.

The basket includes the common stocks of 3M Co., Analog Devices, Inc., Comcast Corp., Dow Chemical Co., Duke Energy Corp., Freeport-McMoRan Copper & Gold Inc., Limited Brands, Inc., Marathon Oil Corp., Pfizer Inc., Qwest Communications, Travelers Cos., Inc. and Williams Cos., Inc.

The CDs will pay a coupon in February of each year equal to the average of the basket stocks' component returns, subject to a floor of 0.5%.

If a basket stock's underlying return is flat or positive, its component return will equal the auto cap rate, which is expected to be 6% to 9% and will be set at pricing. Otherwise, its component return will be the greater of its underlying return and negative 50%.

The payout at maturity will be par.

The CDs will be putable annually in March beginning on March 30, 2012. Investors will receive the current market value of the CDs minus an early redemption charge.

The CDs (Cusip: 40431GLP2) will price on Feb. 23 and settle on Feb. 28.

HSBC Securities (USA) Inc. is the agent.

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