HSBC plans contingent multi-coupon opportunity CDs linked to S&P 500

By Angela McDaniels

Tacoma, Wash., Sept. 1 - HSBC Bank USA, NA plans to price contingent multi-coupon opportunity certificates of deposit due Sept. 25, 2015 linked to the S&P 500 index, according to a term sheet.

Interest is payable annually. If the index remains at or below the barrier throughout an annual observation period, the coupon payment for that year will be equal to the index return, subject to a floor of zero. Otherwise, the coupon payment for that year will equal the rebate return, which is expected to be 1% to 2% and will be set at pricing.

The barrier for the first annual observation period - Sept. 23, 2009 through Sept. 22, 2010 - is 115% of the initial index level. The barrier will be 120%, 130%, 140%, 145% and 150% of the initial level in the second, third, fourth, fifth and sixth annual observation periods, respectively.

The payout at maturity will be par.

The CDs will be putable on Sept. 30, 2010, Sept. 30, 2011, Sept. 28, 2012, Sept. 30, 2013 and Sept. 29, 2014. Investors will receive the then-current market value of the CDs minus an early redemption charge of 3.5% in the first year, 2.5% in the second year, 1.5% in the third year and 0.5% in the fourth year. There is no charge in years five and six.

The CDs are expected to price Sept. 22 and settle Sept. 25.

HSBC Securities (USA) Inc. is the agent, and Advisors Asset Management, Inc. is the distributor.

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