HSBC plans floored annual income opportunity CDs linked to 10 stocks

By Angela McDaniels

Tacoma, Wash., Sept. 2 - HSBC Bank USA, NA plans to price floored annual income opportunity certificates of deposit due Sept. 25, 2015 linked to a basket of common stocks, according to a term sheet.

The equally weighted basket includes the stocks of Abbott Laboratories, Apple Inc., Boeing Co., Chevron Corp., Goldman Sachs Group, Inc., Monsanto Co., Nucor Corp., Qualcomm Inc., PepsiCo, Inc. and Target Corp.

The CDs will pay a coupon in September of each year equal to the average of the returns for the basket stocks, subject to a floor of zero. Each basket stock's return will be capped at 9% to 12% and be subject to a floor of negative 30%, with the exact cap to be set at pricing.

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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