New Issue: HSBC prices $2.3 million 17% reverse convertibles linked to Frontier Oil

By Angela McDaniels

Seattle, Jan. 30 - HSBC USA Inc. priced a $2.3 million offering of reverse convertible notes due May 3, 2007 linked to the common stock of Frontier Oil Corp., according to a 424B2 filing with the Securities and Exchange Commission.

The three-month notes will pay 4.25% at maturity for an annualized rate of 17%.

In addition to interest, the payout at maturity will be par unless Frontier Oil stock falls below the barrier price of $21.37 during the life of the notes and finishes below the initial share price of $26.71, in which case the payout will be a number of Frontier Oil shares equal to $1,000 divided by the initial share price.

Issuer:	HSBC USA Inc.
Issue:	Reverse convertible notes
Underlying stock:	Frontier Oil Corp.
Amount:	$2.3 million
Maturity:	May 3, 2007
Coupon:	17%, payable at maturity
Price:	Par
Payout at maturity:	Par if Frontier Oil stock remains at or above the barrier price during the life of the notes or finishes at or above the initial share price; otherwise, 37.43916 Frontier Oil shares
Initial share price:	$26.71
Barrier price:	$21.37, 80% of initial share price
Pricing date:	Jan. 26
Settlement date:	Feb. 2
Agent:	HSBC Securities (USA) Inc.
Agent fees:	1.25%

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