HSBC USA prices $5.5 million notes, Bank of America plans notes linked to Russell 2000 index

By Sheri Kasprzak

New York, Aug. 27 - The Russell 2000 index is gaining in popularity, and one sellside market source said the popularity is well-deserved.

On Thursday, HSBC USA Inc. announced it priced almost $5.5 million in buffered market participation notes linked to the index, and Bank of America Corp. announced plans to sell two Strategic Accelerated Redemption Securities through Merrill Lynch & Co.

"It's a tough market," said the market insider reached Thursday afternoon.

"When investors see a ray of light out there, they climb on board. This one stands out because over the past month, it really has had more up days than down. It's pretty steadily up, so that makes it an attractive underlier. These [HSBC notes] have a good upside participation rate."

The HSBC notes have a two-year term. Assuming the reference return is greater than or equal to zero, the notes pay the lesser of the principal rate plus par times the reference return times the 200% upside participation rate and par plus the principal times the 43% maximum cap.

If the reference return is less than the 10% buffer, investors receive par at maturity.

If the reference return falls below the buffer, investors receive the principal amount plus the principal amount times the reference return plus 10%. The reference return is equal to the final level minus the initial level divided by the initial level.

The initial level is 584.02.

Bank of America plans for two

In other Russell 2000-related news, Bank of America announced plans to sell two issues of Stars linked to the index. The notes will be sold through Merrill Lynch.

The two-year notes pay a call premium of between 10% to 14%, if the final value of the index is greater than the initial value at maturity.

If the notes are not called prior to maturity, the notes pay a one-to-one downside loss.

On Thursday, the index closed down 0.25 to end at 583.77.

Eksportfinans prices $7.76 million

In other structured products news Thursday, Wells Fargo Securities LLC sold $7.76 million in access securities for Eksportfinans ASA, said a form 424B3 filing from the Securities and Exchange Commission.

The 18-month notes are linked to an equally weighted basket of exchange traded funds, including the SPDR Trust, series 1; the iShares MSCI EAFE index fund; the iShares Russell 2000 index fund; and the iShares S&P MidCap 400 index fund.

The notes pay par times the percentage increase in the value of the basket, subject to a maximum payment of $160 per security. If the final basket is less than the initial level at maturity but less than the 85% buffer level, the investors will receive par at maturity.

If the final basket level is less than the buffer level, investors will receive 1.17647 times the principal amount.

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