HSBC to issue 36.3% down & in worst of reverse convertibles linked to stock basket

By Angela McDaniels

Seattle, Aug. 6 - HSBC USA Inc. plans to price down & in worst of reverse convertible notes due Feb. 28, 2008 linked to a basket of stocks, according to an FWP filing with the Securities and Exchange Commission.

The six-month notes will pay 18.15% for an annualized rate of 36.3%. Interest will be payable monthly.

The basket will include the common stock of Ceradyne, Inc., Force Protection, Inc., Smith & Wesson Holding Corp. and Teledyne Technologies Inc.

The payout at maturity will be par unless any stock falls below its barrier price - 70% of its initial share price - during the life of the notes and the worst-performing stock finishes below its initial share price, in which case the payout will be a number of shares of the worst-performing stock equal to $1,000 divided by its initial share price.

The notes are expected to price on Aug. 24 and settle on Aug. 29.

HSBC Securities (USA) Inc. will be the agent.

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