Unassociated Document
CALCULATION
OF REGISTRATION FEE
Title
of Class of Securities Offered
|
Maximum
Aggregate Offering Price
|
Amount
of Registration Fee (1)
|
Annual
Review Notes Linked to the S&P 500®
Index due January 31, 2012
|
$31,015,000
|
$1,218.89
|
(1) Calculated in accordance with Rule
457(r) of the Securities Act of 1933, as amended.
|
Filed
Pursuant to Rule 424(b)(2)
Registration
No. 333-133007
January
16, 2009
PRICING
SUPPLEMENT
(To
Prospectus dated April 5, 2006,
Prospectus
Supplement dated October 12, 2007,
Product
Supplement dated December 3, 2008
and
Prospectus Addendum dated December 12,
2007)
|
Structured
Investments
|
|
HSBC
USA Inc.
$31,015,000
Annual
Review Notes Linked to the S&P 500®
Index due January 31, 2012
|
General
|
·
|
Terms
used in this pricing supplement are described or defined in the product
supplement, prospectus supplement and prospectus. The notes offered will
have the terms described in the product supplement, prospectus supplement
and prospectus. The notes are not principal protected, and you may lose up
to 100.00% of your initial
investment.
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|
·
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This debt is not guaranteed
under the Federal Deposit Insurance Corporation’s Temporary Liquidity
Guarantee Program.
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·
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All
references to “Auto-Callable Notes” in the product supplement shall refer
to these Annual Review Notes.
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·
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This
pricing supplement relates to a single note offering. The purchaser of a
note will acquire a security linked to the single reference asset
described below.
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·
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Although
the offering relates to a reference asset, you should not construe that
fact as a recommendation as to the merits of acquiring an investment
linked to the reference asset or any component security included in the
reference asset or as to the suitability of an investment in the related
notes.
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|
·
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Senior
unsecured obligations of HSBC USA Inc. maturing January 31,
2012.
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|
·
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Minimum
denominations of $20,000 and integral multiples of $1,000 in excess
thereof.
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·
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If the terms
of the notes set forth below are inconsistent with those described in the
accompanying product supplement, the terms set forth below will supersede.
See “Supplemental Information Relating to the Terms of the Notes” in this
pricing supplement.
|
Key Terms
Reference
Asset:
|
The
S&P 500®
Index (“SPX”) (the “reference asset”)
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Principal
Amount:
|
$1,000
per note.
|
Trade
Date:
|
January
15, 2009
|
Pricing
Date:
|
January
15, 2009
|
Original
Issue Date:
|
January
21, 2009
|
Final
Valuation Date:
|
January
26, 2012, subject to adjustment as described herein.
|
Maturity
Date:
|
3
business days after the final valuation date and is expected to be January
31, 2012. The maturity date is subject to further adjustment as
described under “Specific Terms of the Notes — Market Disruption Events”
in the accompanying product supplement.
|
Auto
Redemption Feature:
|
The
notes will be subject to early redemption on each payment date if the
official closing level as of the relevant valuation date is greater than
or equal to the applicable call level. The notes will be
redeemed at the auto redemption amount corresponding to the relevant
payment date in accordance with the schedule
below:
|
Valuation
Date
|
Call
Level
|
Payment
Date
|
Auto
Redemption Amount
|
January
29, 2010
|
90%
of the initial level
|
3
business days after the first valuation date; expected to be February 3,
2010
|
115.90%
of the principal amount
|
January
28, 2011
|
100%
of the initial level
|
3
business days after second the valuation date; expected to be February 2,
2011
|
131.80%
of the principal amount
|
January
26, 2012
|
100%
of the initial level
|
3
business days after the third valuation date; expected to be January 31,
2012
|
147.70%
of the principal amount
|
Coupon
upon Auto-Redemption:
|
15.90%
per annum.
|
Payment
at Maturity:
|
For
each note, the cash settlement value.
|
Cash
Settlement Value:
|
If
the notes have not been redeemed early pursuant to the auto redemption
feature, including auto redemption on the final valuation date, you will
receive a cash payment on the maturity date as described
below:
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|
(i) If
the final level is greater than or equal to the contingent protection
level, you will receive an amount equal to 100% of the principal
amount.
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(ii)
If the final level is less than the contingent protection level, you will
lose 1.1111% of the principal amount for each percentage point that the
reference return is less than the contingent protection
level. For example, if the reference return is -40%, you will
suffer a 33.33% loss and receive 66.67% of the principal
amount.
|
Contingent
Protection Level:
|
759.37
(equal to 90% of the initial level).
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Reference
Return:
|
The
quotient, expressed as a percentage, of (i) the final level minus the
initial level divided by (ii) the initial level, expressed as a
formula:
|
|
Final level – Initial level
Initial
level
|
Initial
level:
|
843.74,
which represents the official closing level (as defined below) of the
reference asset as determined by the calculation agent on the pricing
date.
|
Final
level:
|
The
official closing level of the reference asset as determined by the
calculation agent on the final valuation date.
|
Official
Closing level:
|
The
closing level of the reference asset on any date of determination as
determined by the calculation agent based upon determinations with respect
thereto made by the reference sponsor and displayed on Bloomberg
Professional®
service page “SPX <Index>”.
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CUSIP/ISIN:
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4042K0UN3
/ US4042K0UN35
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Form
of Notes:
|
Book-Entry
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Listing:
|
The
notes will not be listed on any U.S. securities exchange or quotation
system.
|
Investment
in the notes involves certain risks. You should refer to “Selected Risk
Considerations” beginning on page 5 of this document and “Risk Factors” on page
PS-4 of the product supplement and page S-3 of the prospectus
supplement.
Neither
the Securities and Exchange Commission nor any state securities commission has
approved or disapproved of the notes or determined that this pricing supplement,
or the accompanying product supplement, prospectus supplement and prospectus, is
truthful or complete. Any representation to the contrary is a
criminal offense.
The notes
are not deposit liabilities or other obligations of a bank and are not insured
by the Federal Deposit Insurance Corporation or any other governmental agency of
the United States or any other jurisdiction. We may use this pricing
supplement in the initial sale of notes. In addition, HSBC Securities
(USA) Inc. or another of our affiliates or agents may use this pricing
supplement in market-making transactions in any notes after their initial
sale. Unless we or
our agent informs you otherwise in the confirmation of sale, this pricing
supplement is being used in a market-making transaction.
We have
appointed J.P. Morgan Securities Inc. as placement agent for the sale of the
notes. J.P. Morgan Securities Inc. will offer the notes to investors
directly or through other registered broker-dealers.
|
Price
to Public(2)
|
Fees
and Commissions
|
Proceeds
to Issuer
|
Per
Note
|
$1,000
|
2.00%
|
98.00%
|
Total
|
$31,015,000
|
$620,300
|
$30,394,700
|
(2)
Certain fiduciary accounts will pay a purchase price of $980 per note, and the
placement agents with respect to sales made to such accounts will forgo any
fees.
JPMorgan
Placement Agent
January 16, 2009
Additional Terms Specific to the
Notes
This
pricing supplement relates to a single note offering linked to the reference
asset identified on the cover page. The purchaser of a note will acquire a
security linked to the reference asset. We reserve the right to
withdraw, cancel or modify any offering and to reject orders in whole or in
part. Although the note offering relates only to a single reference asset
identified on the cover page, you should not construe that fact as a
recommendation as to the merits of acquiring an investment linked to the
reference asset or any securities comprising the reference asset or as to the
suitability of an investment in the notes.
You
should read this document together with the prospectus dated April 5, 2006, the
prospectus supplement dated October 12, 2007, the prospectus addendum of
December 12, 2007 and the product supplement dated December 3,
2008. You should carefully consider, among other things, the matters
set forth in “Selected Risk Considerations” beginning on page 5 of this pricing
supplement and “Risk Factors” on page PS-4 of the product supplement and page
S-3 of the prospectus supplement, as the notes involve risks not associated with
conventional debt securities. All references to “Auto-Callable Notes” in the
product supplement shall refer to the Annual Review Notes. We urge
you to consult your investment, legal, tax, accounting and other advisers before
you invest in the notes. As used herein, references to “HSBC,” “we,”
“us” and “our” are to HSBC USA Inc.
HSBC USA
Inc. has filed a registration statement (including a prospectus, a prospectus
supplement, a product supplement and a prospectus addendum) with the U.S.
Securities and Exchange Commission (“SEC”) for the offering to which this
pricing supplement relates. Before you invest, you should read the
prospectus, prospectus supplement and product supplement in that registration
statement and other documents HSBC USA Inc. has filed with the SEC for more
complete information about HSBC USA Inc. and this offering. You may
get these documents for free by visiting EDGAR on the SEC Web site at
www.sec.gov. Alternatively, HSBC USA Inc. or any dealer participating
in this offering will arrange to send you the prospectus, prospectus addendum,
prospectus supplement and product supplement if you request them by calling
toll-free 1 888 800 4722.
You may
also obtain:
We are
using this pricing supplement to solicit from you an offer to purchase the
notes. You may revoke your offer to purchase the notes at any time
prior to the time at which we accept your offer by notifying HSBC Securities
(USA) Inc. We reserve the right to change the terms of, or reject any
offer to purchase, the notes prior to their issuance. In the event of
any material changes to the terms of the notes, we will notify
you.
What
Is the Total Return on the Notes at Maturity Assuming a Range of Performance for
the Reference Asset?
The
following table illustrates the hypothetical simple total return (i.e., not
compounded) on the notes that could be realized on the applicable payment date
for a range of movements in the reference asset as shown under the column
“Return on Reference Asset as of applicable Valuation Date.” The table reflects
that the percentages used to calculate the auto redemption amount applicable to
the first, second, and final valuation dates are 15.90%, 31.80% and 47.70%,
respectively, regardless of the appreciation of the reference asset, which may
be significant. There will be only one payment on the notes whether redeemed
early or at maturity. An entry of “N/A” indicates that the notes would not be
redeemed on the applicable payment date and no payment would be made for such
date. The hypothetical returns set forth below are for illustrative purposes
only and may not be the actual total returns applicable to a purchaser of the
notes.
Official
closing
level
|
Return
on
Reference
Asset as
of
applicable
Valuation
Date
|
Return
on Notes
at
1st
Payment Date
|
Return
on Notes at
2nd
Payment Date
|
Return
on Notes at Final
Payment
Date
|
1,687.48
|
100%
|
15.90%
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31.80%
|
47.70%
|
1,603.11
|
90%
|
15.90%
|
31.80%
|
47.70%
|
1,518.73
|
80%
|
15.90%
|
31.80%
|
47.70%
|
1,434.36
|
70%
|
15.90%
|
31.80%
|
47.70%
|
1,349.98
|
60%
|
15.90%
|
31.80%
|
47.70%
|
1,265.61
|
50%
|
15.90%
|
31.80%
|
47.70%
|
1,181.24
|
40%
|
15.90%
|
31.80%
|
47.70%
|
1,096.86
|
30%
|
15.90%
|
31.80%
|
47.70%
|
1,012.49
|
20%
|
15.90%
|
31.80%
|
47.70%
|
928.11
|
10%
|
15.90%
|
31.80%
|
47.70%
|
843.74
|
0%
|
15.90%
|
31.80%
|
47.70%
|
759.37
|
-10%
|
15.90%
|
N/A
|
0.00%
|
674.99
|
-20%
|
N/A
|
N/A
|
-11.11%
|
590.62
|
-30%
|
N/A
|
N/A
|
-22.22%
|
506.24
|
-40%
|
N/A
|
N/A
|
-33.33%
|
421.87
|
-50%
|
N/A
|
N/A
|
-44.44%
|
337.50
|
-60%
|
N/A
|
N/A
|
-55.56%
|
253.12
|
-70%
|
N/A
|
N/A
|
-66.67%
|
168.75
|
-80%
|
N/A
|
N/A
|
-77.78%
|
84.37
|
-90%
|
N/A
|
N/A
|
-88.89%
|
0.00
|
-100%
|
N/A
|
N/A
|
-100.00%
|
Hypothetical Examples of Amounts Payable
at Maturity
The
following examples illustrate how the total returns set forth in the table and
graph above are calculated.
Example 1: The official closing level
at the close of trading on the first valuation date is greater than the
applicable call level. Because the official closing level as of the first
valuation date is greater than or equal to the applicable call level, the note
is redeemed on the first payment date, and the investor receives a payment on
the first payment date of $1,159 per $1,000 principal amount note, calculated as
follows:
$1,000 +
($1,000 x 15.90%) = $1,159
Example 2: The level of the reference
asset increases from the initial level of 843.74 to a final level of
1,170. Because the final level of 1,170 is greater than or equal to the
initial level of 843.74 and the notes have not been redeemed on a prior payment
date pursuant to the auto redemption feature, the investor receives a payment on
the final payment date (the maturity date) of $1,477 per $1,000 principal amount
note, calculated as follows:
$1,000 +
($1,000 x 47.70%) = $1,477
Example 3: The level of the reference
asset decreases from the initial level of 843.74 to a final level of 800.
Because the final level of 800 is less than the applicable call level but
greater than the contingent protection level of 759.37, the investor receives
the principal amount of 1,000 at maturity.
Example 4: The level of the reference
asset decreases from the initial level of 843.74 to a final level of 675.
Because the final level of 675 is less than the applicable call level and less
than the contingent protection level, the investor receives a payment at
maturity of $833.34 per $1,000 principal amount note, calculated as
follows:
$1,000 +
($1,000 x (-25% + 10%) x 1.1111) = $833.34
Selected Purchase
Considerations
|
·
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APPRECIATION POTENTIAL
— If the official closing level is greater than or equal to the
applicable call level on a valuation date, your investment will yield a
payment per $1,000 principal amount note of $1,000 plus: (i) 15.90% x
$1,000 if redeemed on the first payment date; (ii) 31.80% x $1,000 if
redeemed on the second payment date; or (iii) 47.70% x $1,000 if redeemed
on the final payment date (the maturity date). Because the notes are our
senior unsecured obligations, payment of any amount if redeemed early or
at maturity is subject to our ability to pay our obligations as they
become due.
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|
·
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DIVERSIFICATION OF THE S&P
500® INDEX — The return on
the notes is linked to the S&P 500®
Index. The S&P 500®
Index consists of 500 component stocks selected to provide a performance
benchmark for the U.S. equity markets. For additional information about
the reference asset, see the information set forth under “Description of
the Reference Asset” herein.
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·
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POTENTIAL EARLY EXIT WITH
APPRECIATION AS A RESULT OF AUTOMATIC EARLY REDEMPTION FEATURE —
While the original term of the notes is just over 3 years, the notes will
be redeemed before maturity if the official closing level is greater than
or equal to the applicable call level on the applicable valuation date and
you will be entitled to the applicable payment corresponding to such
valuation date set forth on the cover of this pricing
supplement. In such event, you will not receive any additional
payments on the notes.
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|
·
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PRINCIPAL
PROTECTION IN LIMITED CIRCUMSTANCES — Your principal amount will be
protected only if the notes have not been redeemed early pursuant to the
auto redemption feature and if the final level is greater than or equal to
the contingent protection level on the final valuation date. If
the final level is below the contingent protection level on the final
valuation date, you will lose 1.1111% of your principal for every 1% by
which the final level is below the contingent protection
level. Accordingly, you may lose up to 100% of your principal
amount.
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|
·
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TAX TREATMENT — There is
no direct legal authority as to the proper tax treatment of the notes, and
therefore significant aspect of the tax treatment of the notes are
uncertain. Under one approach, the notes should be treated as
pre-paid forward or other executory contracts with respect to the
reference asset. We intend to treat the notes consistent with
this approach. Pursuant to the terms of the notes, you agree to
treat the notes under this approach for all U.S. federal income tax
purposes and, in the opinion of Cadwalader, Wickersham & Taft LLP,
special U.S. tax counsel to us, it is reasonable to treat the notes in
accordance with this approach. Under this approach, we do not
intend to report any income or gain with respect to the notes prior to
their maturity or an earlier redemption, sale or exchange, and if the U.S.
holder has held the note for more than one year at such time for federal
income tax purposes, we intend to treat any gain or loss as long-term
capital gain or loss. For a further discussion of U.S. federal
income tax consequences related to the notes, including other possible
characterizations and treatments, see the section “Certain U.S. Federal
Income Tax Considerations — Notes With no Potential Periodic Interest
Payments” in the accompanying product
supplement.
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Selected Risk
Considerations
An
investment in the notes involves significant risks. Investing in the notes is
not equivalent to investing directly in the reference asset or any of the
component securities of the reference asset. These risks are explained in more
detail in the “Risk Factors” section of the accompanying product
supplement.
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·
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SUITABILITY OF NOTES FOR
INVESTMENT – A person should reach a decision to invest in the
notes after carefully considering, with his or her advisors, the
suitability of the notes in light of his or her investment objectives and
the information set out in this pricing supplement. Neither the
Issuer nor any dealer participating in the offering makes any
recommendation as to the suitability of the notes for
investment.
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|
·
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YOUR INVESTMENT IN THE NOTES
MAY RESULT IN A LOSS — If the notes are not redeemed early pursuant
to the auto redemption feature and if the final level is less than the
contingent protection level on the final valuation date, you will lose
1.1111% of your principal amount for every 1% decline in the final level
compared to the contingent protection level. YOU MAY LOSE UP TO 100% OF YOUR
INVESTMENT.
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·
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LIMITED RETURN ON THE
NOTES — Your maximum potential payment on the notes will
be limited to the auto redemption amount applicable for a payment date, as
set forth on the cover of this pricing supplement, regardless of the
appreciation in the reference asset, which may be significant. Because the
level of the reference asset at various times during the term of the notes
could be higher than on the valuation dates and at maturity, you may
receive a lower payment if redeemed early or at maturity, as the case may
be, than you would have if you had invested directly in the reference
asset.
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|
·
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CERTAIN BUILT-IN COSTS ARE
LIKELY TO ADVERSELY AFFECT THE VALUE OF THE NOTES PRIOR TO MATURITY
— While the payment at maturity described in this pricing supplement is
based on the full principal amount of your notes, the original issue price
of the notes includes the placement agent’s commission and the estimated
cost of hedging our obligations under the notes through one or more of our
affiliates. As a result, the price, if any, at which HSBC Securities (USA)
Inc. will be willing to purchase notes from you in secondary market
transactions, if at all, will likely be lower than the original issue
price, and any sale prior to the maturity date could result in a
substantial loss to you. The notes are not designed to be short-term
trading instruments. Accordingly, you should be able and willing to hold
your notes to maturity.
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·
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NO INTEREST OR DIVIDEND
PAYMENTS OR VOTING RIGHTS — As a holder of the notes, you will not
receive interest payments, and you will not have voting rights or rights
to receive cash dividends or other distributions or other rights that
holders of securities composing the reference asset would
have.
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|
·
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LACK OF LIQUIDITY — The
notes will not be listed on any securities exchange. HSBC Securities (USA)
Inc. or an affiliate intends to offer to purchase the notes in the
secondary market but is not required to do so. Even if there is a
secondary market, it may not provide enough liquidity to allow you to
trade or sell the notes easily. Because other dealers are not likely to
make a secondary market for the notes, the price at which you may be able
to trade your notes is likely to depend on the price, if any, at which
HSBC Securities (USA) Inc. or one of its affiliates is willing to buy the
notes.
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|
·
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POTENTIAL CONFLICTS — We
and our affiliates play a variety of roles in connection with the issuance
of the notes, including acting as calculation agent and hedging our
obligations under the notes. In performing these duties, the economic
interests of the calculation agent and other affiliates of ours are
potentially adverse to your interests as an investor in the notes. In
addition, we are currently one of the companies that make up the reference
asset. We will not have any obligation to consider your interests as a
holder of the notes in taking any corporate action that might affect the
level of the reference asset and the value of the
notes.
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|
·
|
THE NOTES ARE NOT INSURED BY
ANY GOVERNMENTAL AGENCY OF THE UNITED STATES OR ANY OTHER
JURISDICTION — The notes are not deposit liabilities or other
obligations of a bank and are not insured by the Federal Deposit Insurance
Corporation or any other governmental agency or program of the United
States or any other jurisdiction. An investment in the notes is
subject to the credit risk of the Issuer, and in the event that the Issuer
is unable to pay its obligations as they become due, you may not receive
the full payment at maturity of the notes. This debt is not guaranteed
under the Federal Deposit Insurance Corporation’s Temporary Liquidity
Guarantee Program.
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|
·
|
MANY ECONOMIC AND MARKET
FACTORS WILL IMPACT THE VALUE OF THE NOTES — In addition to the
level of the reference asset on any day, the value of the notes will be
affected by a number of economic and market factors that may either offset
or magnify each other, including:
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|
·
|
the
expected volatility of the reference
asset;
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·
|
the
time to maturity of the notes;
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|
·
|
the
dividend rate on the equity securities underlying the reference
asset;
|
|
·
|
interest
and yield rates in the market
generally;
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|
·
|
a
variety of economic, financial, political, regulatory or judicial events;
and
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|
·
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our creditworthiness, including
actual or anticipated downgrades in our credit
ratings.
|
Description of the Reference
Asset
This
pricing supplement is not an offer to sell and it is not an offer to buy
interests in any reference asset or any of the securities comprising any
reference asset or any underlying index. All disclosures contained in
this pricing supplement regarding a reference asset, including its make-up,
performance, method of calculation and changes in its components, where
applicable, are derived from publicly available information. Neither HSBC nor
any of its affiliates assumes any responsibilities for the adequacy or accuracy
of information about any reference asset or any constituent included in any
reference asset contained in this pricing supplement. You should make
your own investigation into each reference asset.
We urge
you to read the section “Sponsors or Issuers and Reference Asset” on
page S-37 in the accompanying prospectus supplement.
The
S&P 500®
Index
We
have derived all information relating to the reference asset, including, without
limitation, its make-up, performance, method of calculation and changes in its
components, from publicly available sources. That information reflects the
policies of and is subject to change by, Standard & Poor’s, a division of
The McGraw-Hill Companies, Inc. (“S&P”). S&P is under no
obligation to continue to publish, and may discontinue or suspend the
publication of the reference asset at any time.
S&P
publishes the reference asset.
The
reference asset is capitalization weighted and is intended to provide an
indication of the pattern of common stock price movement. The
calculation of the level of the reference asset, discussed below in further
detail, is based on the relative value of the aggregate market value of the
common stocks of 500 companies as of a particular time compared to the aggregate
average market value of the common stocks of 500 similar companies during the
base period of the years 1941 through 1943. As of January 15, 2009,
411 companies, or 82.20% of the reference asset, traded on the New York Stock
Exchange and 89 companies, or 17.60% of the reference asset, traded on The
NASDAQ Stock Market. S&P chooses
companies for inclusion in the reference asset with the aim of achieving a
distribution by broad industry groupings that approximates the distribution of
these groupings in the common stock population of the New York Stock Exchange
(the “NYSE”), which S&P uses as an assumed model for the composition of the
total market.
Relevant
criteria employed by S&P include the viability of the particular company,
the extent to which that company represents the industry group to which it is
assigned, the extent to which the market price of that company’s common stock is
generally responsive to changes in the affairs of the respective industry and
the market value and trading activity of the common stock of that
company. Ten main groups of companies comprise the reference asset
with the number of companies included in each group, as of January 15, 2009,
indicated in parentheses: Industrials (59), Utilities (34), Telecommunication
Services (9), Materials (29), Information Technology (75), Energy (39), Consumer
Staples (40), Consumer Discretionary (80), Health Care (54) and Financials
(81). Changes in the Reference Asset are reported daily in the
financial pages of many major newspapers, on the Bloomberg Professional® service
under the symbol “SPX” and on S&P website
(http://www.spglobal.com). Information contained in the S&P
website is not incorporated by reference in, and should not be considered a part
of, this pricing supplement. The Reference Asset does not reflect the
payment of dividends on the stocks included in the Reference Asset.
Computation
of the Reference Asset
S&P
currently computes the reference asset as of a particular time as
follows:
|
(i)
|
the
product of the market price per share and the number of then outstanding
shares of each component stock as determined as of that time (referred to
as the “market value” of that
stock);
|
|
(ii)
|
the
market values of all component stocks as of that time are
aggregated;
|
|
(iii)
|
the
average of the market values as of each week in the base period of the
years 1941 through 1943 of the common stock of each company in a group of
500 substantially similar companies is
determined;
|
|
(iv)
|
the
mean average market values of all these common stocks over the base period
are aggregated (the aggregate amount being referred to as the “base
value”);
|
|
(v)
|
the
current aggregate market value of all component stocks is divided by the
base value; and
|
|
(vi)
|
the
resulting quotient, expressed in decimals, is multiplied by
ten.
|
While
S&P currently employs the above methodology to calculate the reference
asset, no assurance can be given that S&P will not modify or change this
methodology in a manner that may affect the performance of the reference
asset.
S&P
adjusts the foregoing formula to offset the effects of changes in the market
value of a component stock that are determined by S&P to be arbitrary or not
due to true market fluctuations.
These
changes may result from causes such as:
|
·
|
the
issuance of stock dividends,
|
|
·
|
the
granting to shareholders of rights to purchase additional shares of
stock,
|
|
·
|
the
purchase of shares by employees pursuant to employee benefit
plans,
|
|
·
|
consolidations
and acquisitions,
|
|
·
|
the
granting to shareholders of rights to purchase other securities of the
company,
|
|
·
|
the
substitution by S&P of particular component stocks in the reference
asset, and
|
In these
cases, S&P first recalculates the aggregate market value of all component
stocks, after taking account of the new market price per share of the particular
component stock or the new number of outstanding shares of that stock or both,
as the case may be, and then determines the new base value in accordance with
the following formula:
Old Base
Value X New Market
Value = New Base Value
Old
Market Value
The
result is that the base value is adjusted in proportion to any change in the
aggregate market value of all component stocks resulting from the causes
referred to above to the extent necessary to negate the effects of these causes
upon the reference asset.
In
addition, S&P standard practice is to remove all closely held shares and
shares held between corporations who are both in the calculations of the
reference asset and a reference asset component’s market value.
License
Agreement with Standard & Poor’s (“S&P”):
We have
entered into a nonexclusive license agreement providing for the license to us,
in exchange for a fee, of the right to use indices owned and published by
S&P’s in connection with some products, including the notes.
The notes
are not sponsored, endorsed, sold or promoted by S&P, a division of The
McGraw Hill Companies, Inc. S&P makes no representation or warranty, express
or implied, to the holders of the notes or any member of the public regarding
the advisability of investing in financial products generally or in the notes
particularly or the ability of the S&P 500® to track
general stock market performance. S&P’s only relationship to HSBC
USA Inc. (other than transactions entered into in the ordinary course of
business) is the licensing of certain service marks and trade names of S&P
and of the S&P 500® which is
determined, composed and calculated by S&P without regard to HSBC
or the notes. S&P has no obligation to take the needs of HSBC or
the holders of the notes into consideration in determining, composing or
calculating the S&P 500®. S&P
is not responsible for and has not participated in the determination of the
timing of the sale of the notoes, prices at which the notes are to initially be
sold, or quantities of the notes to be issued or in the determination or
calculation of the equation by which the notes are to be converted into
cash. S&P has no obligation or liability in connection with the
administration, marketing or trading of the notes.
Historical Performance of Reference
Asset
The
following graph sets forth the historical performance of the reference asset
based on the weekly historical closing levels from January 1, 2003 through
January 15, 2009. The closing level for the reference asset on
January 15, 2009 was 843.74. We obtained the closing levels below from Bloomberg
Professional® service.
We make no representation or warranty as to the accuracy or completeness of the
information obtained from Bloomberg Professional®
service.
The
historical levels of the reference asset should not be taken as an indication of
future performance, and no assurance can be given as to the closing level on the
final valuation date. We cannot give you assurance that the performance of the
reference asset will result in the return of any of your initial
investment.
Certain ERISA
Considerations
We urge
you to read “Certain ERISA Considerations” in the prospectus
supplement.
An
employee benefit plan subject to the fiduciary responsibility provisions of the
Employee Retirement Income Security Act of 1974 (“ERISA”), a plan that is
subject to Section 4975 of the Internal Revenue Code of 1986, as amended (the
“Code”), including individual retirement accounts, individual retirement
annuities or Keogh plans, a governmental or other plan subject to any
laws, rules or regulations substantially similar to Section 406 of ERISA or
Section 4975 of the Code or any entity the assets of which are deemed to be
“plan assets” for purposes of ERISA, Section 4975 of the Code or otherwise, will
be permitted to purchase, hold and dispose of the notes, subject to certain
conditions. Such investors should carefully review the discussion
under “Certain ERISA Considerations” in the prospectus supplement.
Supplemental Plan of
Distribution
J.P.
Morgan Securities Inc. will act as placement agent for the notes and will
receive a fee from the Issuer that would not exceed $20 per $1,000 face amount
of notes.