HSBC plans annual income opportunity CDs linked to commodity titans

By Angela McDaniels

Tacoma, Wash., Feb. 1 - HSBC Bank USA, NA plans to price annual income opportunity certificates of deposit due Feb. 25, 2016 linked to a basket of commodity stocks, according to a term sheet.

The basket includes Archer-Daniels-Midland Co., Barrick Gold Corp., Cameco Corp., El Paso Corp., Freeport-McMoRan Copper & Gold Inc., International Paper Co., Mosaic Co., Schlumberger Ltd., Transocean Ltd. and Weyerhaeuser Co.

Interest is payable in February of each year and will equal the average of the returns on the basket stocks, subject to a floor of zero. Each stock's return will be capped at 7% to 10%, with the exact cap to be set at pricing, and will have a floor of negative 30%.

The payout at maturity will be par.

The CDs will be putable on Feb. 28, 2011, Feb. 28, 2012, Feb. 28, 2013, Feb. 28, 2014 and Feb. 27, 2015. The redemption amount will be the then-current market value of the CDs minus an early redemption charge of 3.5% in year one, 2.5% in year two, 1.5% in year three and 0.5% in year four. There is no charge in year five or year six.

The CDs will price Feb. 22 and settle Feb. 25.

HSBC Securities (USA) Inc. is the agent.

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