HSBC Prices $1.5 Billion In Perpetual Convertibles — Interest Payments Can Be Cancelled
The securities start with a 7.625% interest rate, but a capital trigger would convert them into shares and end HSBC’s obligations.
HSBC priced $1.5 billion of perpetual subordinated contingent convertible securities Thursday at 100% of principal, with an initial interest rate of 7.625%. Its prospectus supplement gives HSBC discretion to cancel interest payments and requires conversion into shares if a capital-adequacy trigger occurs.
$1.485 billion before expenses
The offering carries a 1% underwriting discount, or $15 million, leaving HSBC with proceeds before expenses of $1.485 billion. HSBC is the sole book-running manager, and the underwriters expect delivery on or about November 13.
The initial rate applies from the expected issue date of November 13 until May 13, 2032. Thereafter, the rate resets every fifth anniversary to the applicable reference rate plus 3.004%. A reset could leave holders receiving a lower rate than the initial 7.625%.
Interest payments are scheduled for May 13 and November 13 each year, starting May 13, 2027, but only interest that has not been cancelled becomes payable.
No maturity, no guaranteed interest
HSBC can cancel an interest payment entirely or partly, for any reason. The terms also provide circumstances that restrict payments and cause interest to be treated as cancelled.
The securities have neither a fixed maturity nor a fixed redemption date. HSBC is not required to repay principal before a winding-up event, and holders could receive no payments if the bank cancels all interest.
HSBC may choose to redeem the entire series during optional redemption periods at 100% of principal plus accrued, unpaid interest, excluding cancelled interest. That is an option for HSBC, rather than a repayment date promised to holders.
Conversion can erase principal claims
A capital-adequacy trigger would require automatic conversion without delay and no later than one month after the trigger is determined to have occurred. The initial conversion price is $3.6342 per share.
Conversion permanently ends HSBC’s obligations under the securities in exchange for issuing shares. Holders could receive those shares or, if HSBC elects a share-sale offer, a combination of sale proceeds and unsold shares.
The supplement warns that the shares’ realizable value could fall substantially below the initial conversion price, potentially costing holders part or all of their investment. Separately, UK authorities’ bail-in powers can reduce, cancel or convert amounts owed; that process is distinct from the contractual capital trigger.
The securities are not deposits and carry neither UK Financial Services Compensation Scheme coverage nor U.S. Federal Deposit Insurance Corporation insurance.
Sources
- Form 424B5 — HSBC HOLDINGS PLC (HSBC) — SEC EDGAR
- a9491b — sec.gov
- IN BRIEF: HSBC sets tender offer for USD1 billion in convertible bonds | Morningstar — morningstar.com
- HSBC HOLDINGS PLC Form 6-K filed November 3, 2026 — sec.gov
- HSBC HOLDINGS PLC ANNOUNCES INCREASE OF THE MAXIMUM TENDER AMOUNT OF ITS TENDER OFFER FOR ONE SERIES OF SECURITIES — prnewswire.com
- HSBC HOLDINGS PLC ANNOUNCES TENDER OFFER FOR ONE SERIES OF SECURITIES — prnewswire.com
