HSBC Bank plans to price sector selector CDs linked to ETF basket

By Angela McDaniels

Tacoma, Wash., July 6 - HSBC Bank USA, NA plans to price 0% sector selector certificates of deposit with minimum return due July 31, 2014 linked to a basket of exchange-traded funds, according to a term sheet.

The basket includes the Market Vectors Gold Miners, Energy Select Sector SPDR fund, Financial Select Sector SPDR fund, Healthcare Select Sector SPDR fund and Semiconductor Holdrs Trust.

The payout at maturity will be par plus the sum of the locked-in returns, subject to a minimum return of 5%.

On July 28 of each year, the fund that has experienced the highest return on that day will be selected and its return will be the locked-in return for that observation date, subject to a cap that is expected to be 8% to 11% and will be set at pricing. This fund will then be removed from the basket.

The CDs will be putable on the last business day in July of 2010, 2011, 2012 and 2013. The redemption amount will be equal to the then-current market value of the CDs.

The CDs are expected to price July 28 and settle July 31.

HSBC Securities (USA) Inc. is the agent.

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