Long-Term Debt

12 Months Ended

Dec. 31, 2011

Short-Term Borrowings and Long-Term Debt [Abstract]

Long-Term Debt

16.    Long-Term Debt

The composition of long-term debt is presented in the following table. Interest rates on floating rate notes are determined periodically by formulas based on certain money market rates or, in certain instances, by minimum interest rates as specified in the agreements governing the issues. Interest rates in effect at December 31, 2011 are shown in parentheses.

At December 31,	2011		2010
	(in millions)
Issued by HSBC USA:
Non-subordinated debt:
Medium-Term Floating Rate Notes due 2011-2023 (.05% – 2.63%)	$	2,975	$	2,998
$4 billion Floating Rate Notes due 2013-2016 (1.16% – 1.91%)		4,000		1,000
$2,325 million 3.125% Guaranteed Notes due 2011		-		2,301
$350 million 3-Year Floating Rate Guaranteed Notes due 2011		-		346
$250 million 2-Year Floating Rate Notes due 2011		-		250
		6,975		6,895
Subordinated debt:
Fixed Rate Subordinated Notes due 2011-2097 (5.00% – 9.50%)		1,320		1,418
Perpetual Floating Rate Capital Notes (.60%)		129		128
Junior Subordinated Debentures due 2026-2032 (7.75% – 8.38%)		868		868
		2,317		2,414
Total issued by HSBC USA		9,292		9,309
Issued or acquired by HSBC Bank USA and its subsidiaries:
Non-subordinated debt:
Global Bank Note Program:
Medium-Term Notes due 2011-2040 (.05% – 1.53%)		657		804
4.95% Fixed Rate Senior Notes due 2012		25		25
		682		829
Federal Home Loan Bank of New York advances:
Fixed Rate FHLB advances due 2011-2037 (3.68% – 7.24%)		7		7
Floating Rate FHLB advance due 2036 (.47%)		1,000		1,000
		1,007		1,007
Precious metal leases due 2011-2014 (1.50%)		50		46
Secured financings with Structured Note Vehicles (1)		189		320
Other		18		49
Total non-subordinated debt		1,946		2,251
Subordinated debt:
4.625% Global Subordinated Notes due 2014		998		997
Other		55		55
Global Bank Note Program:
Fixed Rate Global Bank Notes due 2017-2039 (4.875% – 7.00%)		4,152		4,176
Total subordinated debt		5,205		5,228
Total issued or acquired by HSBC Bank USA and its subsidiaries		7,151		7,479
Obligations under capital leases		266		292
Total long-term debt	$	16,709	$	17,080

⁽¹⁾  See Note 27, “Variable Interest Entities,” for additional information.

The table excludes $900 million of long-term debt at December 31, 2011 and 2010, due to us from HSBC Bank USA and our subsidiaries. Of this amount, the earliest note is due to mature in 2022 and the latest note is due to mature in 2097.

Foreign currency denominated long-term debt was immaterial at December 31, 2011 and 2010.

At December 31, 2011 and 2010, we have elected fair value option accounting for some of our medium-term floating rate notes and certain subordinated debt. See Note 18, “Fair Value Option,” for further details. At December 31, 2011 and 2010, medium term notes totaling $3.4 billion and $3.7 billion, respectively, were carried at fair value. Subordinated debt of $1.7 billion was carried at fair value at December 31, 2011 and 2010.

In addition, in April 2011, we issued senior notes in the amount of $3.0 billion to HNAH. These notes mature in three equal installments of $1.0 billion in April 2013, 2015 and 2016. The notes bear interest at 90 day USD Libor plus a spread, with each maturity at a different spread.

The $1.3 billion 4.875% 10-Year Subordinated Notes issued in 2010 by HSBC Bank USA are due August 24, 2020. Interest on these notes is payable semi-annually commencing on February 24, 2011. These notes are included in the Fixed Rate Global Bank Notes caption in the table above.

The $750 million 5.00% 10-year Subordinated Notes issued in 2010 by HSBC USA are due September 27, 2020. Interest on these notes is payable semi-annually commencing on March 27, 2011. These notes are included in the Fixed Rate Subordinated Notes caption in the table above.

During the third quarter of 2011, we notified the holders of our outstanding Putable Capital Notes with an aggregate principal amount of $129 million (the “Notes”) that, pursuant to the terms of the Notes, we had elected to revoke the obligation to exchange capital securities for the Notes and would redeem the Notes in full. The Notes were redeemed in January 2012.

The Junior Subordinated Debentures due 2026-2032 are held by four capital funding trusts we established to issue guaranteed capital debt securities in the form of preferred stock backed by the debentures and which we guarantee. The trusts also issued common stock, all of which is held by us and recorded in other assets. The debentures issued to the capital funding trusts, less the amount of their common stock we hold, qualify as Tier 1 capital. Although the capital funding trusts are VIEs, our investment in their common stock is not deemed to be a variable interest because that stock is not deemed to be equity at risk. As we hold no other interests in the capital funding trusts and therefore are not their primary beneficiary, we do not consolidate them.

Maturities of long-term debt at December 31, 2011, including secured financings and conduit facility renewals, were as follows:

	(in millions)
2012	$	2,393
2013		1,640
2014		2,464
2015		1,225
2016		1,236
Thereafter		7,751
Total	$	16,709