HSBC plans five-year annual income opportunity CDs on 12 stocks

By Marisa Wong

Madison, Wis., July 6 - HSBC USA Inc. plans to price annual income opportunity CDs with auto cap due July 29, 2016 linked to a basket of 12 stocks, according to a pricing sheet.

The basket includes the common stocks of Alpha Natural Resources, AT&T, El Paso Corp., Ford Motor Co., Freeport-McMoRan Copper & Gold, Gap Inc., Las Vegas Sands Corp., News Corp., Nvidia Corp., Pfizer Inc., Salesforce.com Inc. and Xerox Corp.

Interest is payable annually and will equal the average of the performances of the basket stocks, subject to a floor of 0.5%.

If a basket stock's return is zero or positive, its performance will be fixed at 6% to 9%. The exact auto cap rate will be determined at pricing. If a basket stock's return is negative, its performance will be the greater of the stock return and negative 50%.

The payout at maturity will be par.

The CDs are putable on Aug. 31, 2012, Aug. 30, 2013, Aug. 29, 2014 and Aug. 31, 2015. Investors will be subject to an early redemption charge.

The CDs (Cusip: 40431GUY3) will price on July 26 and settle on July 29.

HSBC Securities (USA) Inc. is the agent.

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