HSBC USA brings $65.64 million of Hang Seng China Enterprises index-linked enhanced notes

By Sheri Kasprzak

New York, Feb. 14 - Heading up structured products action, HSBC USA Inc. came to market with $65.64 million of enhanced notes linked to the Hang Seng China Enterprises index and the deliverable Chinese renminbi relative to the dollar -- a deal that was unusually large for the underlying component, market sources said.

"The thing that's interesting is that you don't see this index outside of a basket very often, and it is a pretty decent size," said one sellside source not connected to the deal, when asked about the offering.

"There's nothing in particular about the index specifically that I would say makes this deal interesting."

The sellsider noted that the terms are appealing for investors that believe that the index will post gains.

Notes pay double upside

The zero-coupon notes, which are due Feb. 26, 2014, pay par plus double any gain in the index up to a 36.3% cap. Investors share in any losses.

HSBC Securities (USA) Inc. was the agent, and J.P. Morgan Securities LLC and JPMorgan Chase Bank, NA were the dealers.

The index on Thursday gained 171.66, or 1.47%, to close at 11,821.44.

Index most recently part of basket

The Hang Seng China Enterprises index was most recently featured as part of an Asian index basket. On Dec. 12, Barclays Bank plc pried $1.5 million of zero-coupon Super Track notes linked to an equally weighted basket that included the Hang Seng China Enterprises index, the Korea Composite Stock Price Index 200, Hang Seng index, MSCI Taiwan Price index and MSCI Singapore Free Price index.

Those bonds are due Dec. 14, 2017, and pay par plus 1.2 times any basket gain. The investors receive par if the basket falls by up to 25% and investors are exposed to any losses beyond 25%.

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