Banking major HSBC raised $2bn via a two-part AT1 offering. It raised:

  • $1bn via a perpetual non-call 5Y (PerpNC5) bond at a yield of 4%, 37.5bp inside initial guidance of 4.375% area
  • $1bn via a perpetual non-call 10Y (PerpNC10) at a yield of 4.7%, 30bp inside initial guidance of 5% area

The SEC-registered AT1 contingent convertibles (CoCos) have expected ratings of Baa3/BBB, four/two notches lower than its issuer rating of A2/A-/A+. Proceeds will be used for general corporate purposes and to maintain or strengthen the capital base under the Capital Instruments Regulations. If not called on the first call date (callable anytime between March 9 and September 9, 2026 and 2031 respectively), both bonds’ coupons will reset every five years to the then constant maturity Treasury yield plus the initial margin. A capital adequacy trigger event would occur if the non-transitional CET1 ratio of the group falls below 7%. The bank’s current CET1 stands at 15.9%. The newly issued PerpNC10s offer a new issue premium of 23bp over their older 4.6% Perps callable in December 2030 that are currently yielding 4.47% on the secondary markets.

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