Two certificates of deposit to price; J.P. Morgan to price another slate of notes for Morgan Stanley

By Sheri Kasprzak

New York, Jan. 19 - The imminent pricing of two certificates of deposit led structured products news to round out the week.

HSBC USA, Inc. and Rabobank NA were both set to price CDs through LaSalle Financial Services, Inc.

"CDs are kind of the wave of the future," said one market source familiar with the product. "Investors like them because they're pretty common outside of the structured products arena and they're pretty straightforward."

The Rabobank CD, a 100% principal-protected World Basket Certificate of Deposit, is linked to the MSCI Singapore Free, Dow Jones EuroStoxx 50 and Nikkei 225 indexes.

The payout at maturity will be par plus the basket return times a to-be-determined supplemental redemption amount. Investors will receive at least par.

The CD matures Oct. 25, 2010 and is set to close on Jan. 24.

The HSBC CD, due July 29, 2011, is set to close on Jan. 25 and is linked to a basket of indexes.

The basket includes equal weights of the Nikkei 225, Hong Kong Hang Seng China Enterprises, Morgan Stanley Capital International Taiwan and Morgan Stanley Capital International Singapore Cash indexes.

The payout at maturity will be par plus the return on the basket. Investors will receive at least par.

Morgan Stanley to price deals

Elsewhere in structured products news, J.P. Morgan Securities Inc. will again price notes for Morgan Stanley.

The offerings include 0% annual review notes linked to the S&P 500 index, 0% buffered return enhanced notes linked to the Dow Jones Euro Stoxx 50 index and 0% buffered return enhanced notes linked to the Nikkei 225 index.

As a market source noted this week, the Dow Jones Euro Stoxx 50, Nikkei 225 and S&P 500 indexes are expected to be popular in the structured products market again this year, particularly the Nikkei.

Deal terms

Under the terms of the three-year S&P-linked notes, investors' principal is protected up to a 10% decline in the index level.

The notes, which are set to price Jan. 26, pay par at maturity and investors will lose 1.1111% for every 1% decline in the index beyond 10%.

The notes will be automatically called at increasing premiums if the index level is at or above the initial index level on one of three annual review dates.

For each $1,000 principal amount, the redemption amount will be par plus at least 8.45% if called on Feb. 8, 2008, par plus at least 16.9% if called on Feb. 9, 2009 and par plus at least 25.35% if called on Feb. 8, 2010. The exact redemption amounts will be determined at pricing.

The one-year buffered return enhanced notes linked to the Euro Stoxx index pay out double the return on the index up to 16.4%. These notes are also protected up to a 10% decline. Investors will lose 1.111% for every 1% decline beyond 10%. The EuroStoxx-linked notes are set to price Jan. 26.

The Nikkei-linked notes pay double any return on the index up to 21.3%. The investors will lose 1.1111% of their investment for every 1% beyond 10% the index drops.

One of several deals

The most recent line up of deals to be price for Morgan Stanley by J.P. Morgan is in addition to deals priced last week.

Last week, the investment banks announced that J.P. Morgan would be pricing two 0% annual review notes linked to the S&P 500 index.

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