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HSBC plans to price knock-out barrier CDs linked to S&P 500 index
By Angela McDaniels
Tacoma, Wash., Aug. 2 - HSBC Bank USA, NA plans to price 0% knock-out barrier certificates of deposit due Aug. 27, 2015 linked to the S&P 500 index, according to a term sheet.
If the index remains at or below the knock-out barrier throughout the life of the CDs, the payout at maturity will be par plus the index return, subject to a floor of par. The knock-out barrier is expected to be 150% to 160% of the initial level and will be set at pricing.
If the index closes above the barrier during the life of the CDs, the payout at maturity will be par plus 10%.
The CDs will be putable on Aug. 29, 2011, Aug. 29, 2012, Aug. 29, 2013 and Aug. 29, 2014. Investors will receive the market value of the CDs minus a redemption charge of 2.5% in year one, 1.5% in year two and 0.5% in year three. There is no charge in year four.
The CDs (Cusip: 40431GCP2) will price Aug. 23 and settle Aug. 26.
HSBC Securities (USA) Inc. is the agent.
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