HSBC Bank plans 'all up' CDs with minimum coupon tied to five stocks

By Angela McDaniels

Tacoma, Wash., Jan. 5 - HSBC Bank USA, NA plans to price "all up" certificates of deposit due Jan. 30, 2017 with minimum coupon linked to a basket of common stocks, according to a term sheet.

The basket includes Home Depot, Inc., Kraft Foods, Inc., McDonald's Corp., Merck & Co., Inc. and Verizon Communications, Inc.

Interest will be payable in January of each year. The coupon will be the variable coupon plus 0.5%. If the closing share price of each basket stock on the relevant observation date is greater than or equal to its initial share price, the variable coupon will be 7% to 9%, with the exact amount to be set at pricing. Otherwise, it will be zero.

The payout at maturity will be par plus the last coupon.

The CDs will be putable on annual early redemption dates. Investors will receive the current market value of the CDs minus a 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 after year four.

The CDs (Cusip: 40431GKN8) will price Jan. 25 and settle Jan. 28.

HSBC Securities (USA) Inc. is the agent.

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