| Add to balance / Manage account | User: | Log out |
| Prospect News home > News index > List of issuers B > Headlines for basket of stocks > News item |
HSBC to price seven-year CDs tied to Morningstar Wide Moat stocks
By Jennifer Chiou
New York, May 2 - HSBC Bank USA, NA plans to price annual income opportunity certificates of deposit with auto cap feature due May 30, 2018 linked to a basket of stocks, according to a term sheet.
The basket includes 12 common stocks that have received a Morningstar Economic Moat rating of "Wide" as of April 19. The term sheet said there are two major requirements for the rating: the prospect of earning above-average returns on capital and some competitive edge that prevents these returns from quickly eroding.
The stocks are CME Group Inc., Eli Lilly & Co., Exxon Mobil Corp., Intel Corp., Lockheed Martin Corp., Lowe's Cos., Inc., Microsoft Corp., Northern Trust Corp., Qualcomm, Inc., Sysco Corp., Time Warner Cable Inc. and Wal-Mart Stores, Inc.
The CDs will pay a coupon in May of each year equal to the average of the basket stocks' component returns, subject to a minimum 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 8% to 11% 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 plus the final coupon.
The CDs will be putable on June 29, 2012, June 28, 2013, June 30, 2014, June 30, 2015, June 30, 2016, and June 30, 2017. Investors will receive the current market value of the CDs minus a redemption charge of 4% in year one, 3% in year two, 2% in year three and 1% in year four.
The CDs (Cusip: 40431GRE1) will price on May 24 and settle on May 27.
HSBC Securities (USA) Inc. is the agent.
© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere.
For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.