HSBC plans 10% STEP Income Securities on Freeport-McMoRan via Merrill

By Susanna Moon

Chicago, Oct. 20 - HSBC USA Inc. plans to price 10% STEP Income Securities due November 2012 linked to Freeport-McMoRan Copper & Gold Inc. shares, according to an FWP filing with the Securities and Exchange Commission.

Bank of America Merrill Lynch is the underwriter.

Interest will be payable quarterly.

If Freeport-McMoRan stock finishes at or above the step level - 110% of the initial share price - the payout at maturity will be par of $10 plus the step payment of 1% to 5%. The exact step payment will be set at pricing.

If the stock finishes below the step level but at or above the threshold level - 90% of the initial price - the payout will be par.

Otherwise, investors will be exposed to any decline in the share price beyond 10%.

The notes are expected to price in October and settle in November.

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