HSBC plans Annual Income Opportunity CDs with 0.3% minimum return linked to 10 stocks

By Angela McDaniels

Tacoma, Wash., June 5 - HSBC Bank USA, NA plans to price Annual Income Opportunity certificates of deposit with minimum return due July 1, 2019 linked to a basket of 10 common stocks, according to a term sheet.

The basket includes American Electric Power Co., AT&T Inc., Biogen Idec Inc., Kimberly-Clark Corp., Lockheed Martin Corp., Maxim Integrated Products, Mosaic Co., Pfizer Inc., Ralph Lauren Corp. and Silver Wheaton Corp.

Interest is payable annually and will equal the average of the performances of the basket stocks, subject to a minimum interest rate of 0.3%.

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

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

The issuer said it is generally willing to repurchase CDs from depositors at any time. It will pay the early redemption amount, which equals par plus any interest due plus the early redemption fee and less an early withdrawal charge of 3% in year one, 2% in year two, 1% in year three and zero after that. The early redemption fee is the current market value of the CDs minus any interest due and minus the principal amount of the CDs.

The CDs (Cusip: 40431GV30) will price June 26 and settle June 29.

HSBC Securities (USA) Inc. is the agent.

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