HSBC plans head-start annual income opportunity CDs linked to stocks

By Angela McDaniels

Tacoma, Wash., Nov. 2 - HSBC Bank USA, NA plans to price head-start annual income opportunity certificates of deposit with auto cap due Nov. 28, 2018 linked to a basket of 10 common stocks, according to a term sheet.

The basket includes Altria Group, Inc., Amazon.com, Inc., Amgen Inc., Archer-Daniels-Midland Co., AT&T Inc., Barrick Gold Corp., General Mills, Inc., Halliburton Co., Intel Corp. and Mattel, Inc.

Interest is payable annually and will equal the average of the performances of the basket stocks, subject to a minimum interest rate of 0%.

A stock's performance will be equal to the auto cap rate if its return is greater than or equal to negative 5%. The auto cap rate is expected to be 6.5% to 9.5% and will be set at pricing. If a stock's return is less than negative 5%, its performance will be the greater of its return and negative 30%.

The payout at maturity will be par.

The issuer said it is generally willing to repurchase CDs from depositors at any time. It will pay the current market value of the CDs minus an early withdrawal charge of 3% in year one, 2% in year two and 1% in year three. There is no charge in years four through seven.

The CDs (Cusip: 40431GA74) will price Nov. 22 and settle Nov. 28.

HSBC Securities (USA) Inc. is the agent.

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