HSBC to price income opportunity CDs linked to U.S. industry titans

By Marisa Wong

Madison, Wis., March 2 - HSBC Bank USA, NA plans to price annual income opportunity certificates of deposit with auto cap feature due March 31, 2017 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 March or April of each year equal to the average of the basket stocks' component returns, subject to a floor of zero.

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 7% to 10% and will be set at pricing. Otherwise, its component return will be the greater of its underlying return and negative 30%.

The payout at maturity will be par.

The CDs will be putable on April 30, 2012, April 30, 2013, April 30, 2014, April 30, 2015, and April 29, 2016. 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 redemption charge in year five.

The CDs (Cusip: 40431GNH8) will price March 28 and settle March 31.

HSBC Securities (USA) Inc. is the agent.

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