HSBC’s $3 Billion Offering

May 22, 2017

Cleary Gottlieb represented HSBC Holdings plc in an SEC-registered offering of $3 billion perpetual subordinated contingent convertible securities.

The offering, a takedown from HSBC Holdings’ shelf registration statement, closed on May 22, 2017.

The securities constitute additional tier 1 capital under the European CRD IV capital regulations and is the largest issuance of AT1 capital by a UK bank. The principal amount will be written down and converted to equity if HSBC Holdings’ CRD IV common equity tier 1 capital ratio falls below 7 percent. The securities have no fixed maturity date. The securities bear a fixed interest rate of 6 percent per annum for the first 10 years, after which the rate will be reset.

Interest payments are subject to cancellation at HSBC Holdings’ discretion and to mandatory cancellation under certain circumstances. The securities are callable by HSBC Holdings in May 2027 and every five years thereafter. The securities are also subject to redemption at HSBC Holdings’ option upon the occurrence of certain tax and regulatory events. The securities are listed on the Irish Stock Exchange.

HSBC Holdings is one of the largest banking and financial services organizations in the world, operating through long-established businesses and serving customers worldwide from around 4,000 offices in 70 countries and territories in Europe, Asia, North and Latin America, and the Middle East and North Africa. Within these regions, a comprehensive range of banking and related financial services is offered to personal, commercial, corporate, institutional, investment and private banking clients.