HSBC Holdings Plc (HSBA) sold $27.5 million of one-year notes tied to LinkedIn Corp., the largest such offering linked to the professional networking business that’s more than doubled its share price this year.
The securities, issued Sept. 26, yield 11 percent a year plus an additional 3.77 percent if the stock is above 111 percent of its initial value, according to a prospectus filed with the U.S. Securities and Exchange Commission. The notes also protect against 5 percent of losses with 95 percent of capital at risk. Bank of America Corp. distributed the offering for a 1.75 percent fee.
LinkedIn, owner of the world’s most popular professional-networking website, rose 121 percent this year to $254.01 when the notes were sold. That’s more than five times the price of its initial public offering of $45 in May 2011.
The company gets most of its revenue from its talent-solutions product, aimed at helping recruiters fill jobs, said Blake Harper, an analyst at Wunderlich Securities Inc. in Baltimore. “We’ve seen a pretty strong willingness from recruiter customers to absorb price increases.”
HSBC estimated the securities’ initial value at 97.3 cents on the dollar, according to the prospectus.
Banks previously sold $8.95 million of notes tied to LinkedIn in nine offerings since April 19, according to data compiled by Bloomberg.
Juanita Gutierrez, a spokeswoman for HSBC in New York, declined to comment.
Banks create structured notes by packaging debt with derivatives to offer customized bets to retail investors while earning fees and raising money. Derivatives are contracts whose value is derived from stocks, bonds, commodities and currencies, or events such as changes in interest rates or the weather.
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