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HSBC plans five-year income opportunity CDs linked to U.S. titans
By Angela McDaniels
Tacoma, Wash., Nov. 1 - HSBC Bank USA, NA plans to price annual income opportunity certificates of deposit with auto cap feature due Nov. 27, 2015 linked to a basket of stocks, according to a term sheet.
The basket includes the common stocks of Alcoa Inc., Altria Group Inc., Centurylink Inc., Consolidated Edison, Inc., General Mills Inc., Gilead Sciences Inc., Intel Corp., Mosaic Co., Pfizer Inc., Schlumberger Ltd., US Bancorp. and Yum! Brands Inc.
The CDs will pay a coupon in November of each year equal to the average of the basket stocks' component returns, subject to a minimum of 0.5%.
If a basket stock's underlying return is flat or positive, its component return will equal the auto cap rate, which is expected to be 5.5% to 8.5% and will be set at pricing. Otherwise, its component return will be the greater of its underlying return and negative 50%.
The payout at maturity will be par.
The CDs will be putable on Dec. 30, 2011, Dec. 31, 2012, Dec. 31, 2013 and Dec. 31, 2014. Investors will receive the current market value of the CDs.
The CDs (Cusip 40431GHC6) will price Nov. 23 and settle Nov. 29.
HSBC Securities (USA) Inc. is the agent.
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