HSBC Bank to price contingent annual income CDs linked to 20 stocks

By Angela McDaniels

Tacoma, Wash., Jan. 27 - HSBC Bank USA, NA plans to price contingent annual income certificates of deposit due Feb. 25, 2016 linked to an equally weighted basket of 20 common stocks, according to a term sheet.

The basket includes American Electric Power Inc., Applied Materials Inc., AT&T Inc., Bank of America Corp., Bank of New York Mellon Corp., Bristol-Myers Squibb Co., ConocoPhillips, Emerson Electric Co., Exelon Corp., Freeport-McMoran Copper & Gold Inc., H.J. Heinz Co., Honeywell International, Intel Corp., Johnson Controls Inc., Kroger Co., Nucor Corp., Merck & Co., Time Warner Inc., Valero Energy Corp. and Verizon Communications Inc.

Interest will be payable in February of each year and will equal the sum of the stocks' weighted performances, subject to a floor of zero.

If a basket stock's return is positive, its performance will equal a fixed rate of 8% to 11%. The exact rate will be set at pricing. If a basket stock's return is negative, its performance will be equal to its return, subject to a floor of negative 30%.

The payout at maturity will be par.

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

HSBC Securities (USA) Inc. is the agent. Morgan Stanley Smith Barney is the distributor.

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