By Angela McDaniels
Tacoma, Wash., Dec. 11 - HSBC USA Inc. said it incorrectly reported the price of $1 million recently sold 0% Elements exchange-traded notes due June 16, 2023 linked to the S&P Commodity Trends Indicator - Total Return.
The company announced on Dec. 8 that it had priced another $3 million of the Elements, bringing the total issue size to $10 million. Of the $3 million, $1 million priced at 116.9 - not 117.0 as previously reported - on Dec. 4 and $2 million priced at 120.4 on Dec. 5.
The company made the correction in a 424B3 filing with the Securities and Exchange Commission.
In June, the company said it would sell up to $250 million of the Elements via Nuveen Investments and Merrill Lynch & Co.
The S&P Commodity Trends Indicator - Total Return is a diversified composite of 16 physical commodity futures grouped into six sectors. It positions each of these sectors either long or short - except energy, which is always positioned either long or flat - based on its price behavior relative to its exponential moving average. HSBC USA said this long/short exposure gives the ETNs the capability to benefit from both rising and declining price trends in the commodities markets.
The payout at maturity will be par of $10 plus the index return, less an annual investor fee equal to 0.75% multiplied by the proportion of days elapsed.
The notes are putable at any time, subject to a minimum put requirement of $2.5 million of notes. Beginning June 16, 2011, HSBC USA can call the notes if $5 million principal amount or less remains outstanding. In both cases, the payout will be determined in the same manner as the payout at maturity.
The notes are listed on NYSE Arca under the symbol "LSC."
Issuer: | HSBC USA Inc.
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Issue: | Elements exchange-traded notes
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Underlying index: | S&P Commodity Trends Indicator - Total Return
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Amount: | $10 million, upsized from $2 million
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Maturity: | June 16, 2023
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Coupon: | 0%
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Price: | 113.1 for $2 million; 109.1 for $4 million; 108.5 for $1 million; 116.9 for $1 million; 120.4 for $2 million
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Payout at maturity: | Par of $10 plus the index return minus an annual investor fee of 0.75%
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Put option: | At any time, subject to a minimum of $2.5 million of notes
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Call option: | From June 16, 2011 onward if $5 million of notes or less remains outstanding
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Pricing date: | Nov. 20 for $2 million; Nov. 24 for $4 million; Nov. 26 for $1 million; Dec. 4 for $1 million; Dec. 5 for $2 million
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Settlement date: | Nov. 25 for $2 million; Nov. 28 for $4 million; Dec. 2 for $1 million; Dec. 9 for $1 million; Dec. 10 for $2 million
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Underwriters: | Nuveen Investments and Merrill Lynch & Co.
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Listing: | NYSE: LSC
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