HSBC to issue US$1.5bn in perpetual subordinated contingent convertible securities
HSBC announced plans to issue US$1.5bn in perpetual subordinated contingent convertible securities with a 7.625% coupon, raising net proceeds of US$1.485bn for general corporate purposes and capital strengthening. The initial conversion price is set at US$3.6342 per share, potentially issuing up to
HSBC announced on Thursday that it will issue US$1.5bn in principal amount of perpetual subordinated contingent convertible securities on 13 November. The securities carry a coupon rate of 7.625 per cent and are expected to raise net proceeds of US$1.485bn, which the bank said will be used for general corporate purposes and to maintain or further strengthen its capital base.
The initial conversion price for the securities is set at US$3.6342 per conversion share, which could result in the issuance of up to approximately 413 million ordinary shares. This would represent about 2.35 per cent of the bank's enlarged issued share capital, according to the announcement.
Following an automatic conversion event, HSBC said it retains full discretion to offer to buy back all or part of the ordinary shares from holders at a certain cash price per conversion share, subject to certain conditions. The initial buyback price per conversion share is set at £2.70.
The move comes as HSBC seeks to bolster its financial position amid ongoing global economic uncertainty. The perpetual subordinated contingent convertible securities structure allows the bank to strengthen its capital adequacy while providing investors with a high-yield instrument.
Analysts noted that the 7.625 per cent coupon rate reflects current market conditions for such hybrid instruments, which combine features of debt and equity. The securities' perpetual nature means they have no fixed maturity date, though conversion rights provide a potential exit for investors.