This is a routine AT1 issuance by a well-capitalized global bank. The 6.750% coupon is attractive relative to HSBC's credit profile, but investors must accept the risk of discretionary interest cancellation and potential conversion into equity if the CET1 ratio falls below 7.0%. Monitor HSBC's CET1 ratio trajectory and regulatory developments around Basel 3.1 implementation in the UK. The securities are not suitable for retail investors.
Price Chart
Executive Summary
HSBC Holdings is issuing $1.5 billion of 6.750% Perpetual Subordinated Contingent Convertible Securities (AT1 CoCos) to strengthen its capital base. The securities are perpetual, have no fixed maturity, and interest payments can be cancelled at HSBC's sole discretion. The offering is a routine capital management transaction for a well-capitalized global bank (CET1 ratio of 14.0% as of March 31, 2026) and is not a signal of financial distress.
Key Facts
- HSBC is offering $1,500,000,000 principal amount of 6.750% Perpetual Subordinated Contingent Convertible Securities.
- The securities are perpetual with no fixed maturity or redemption date.
- Interest rate is 6.750% per annum from May 18, 2026 to May 18, 2033, then resets every five years at 5-year UST + 2.513%.
- HSBC has sole and absolute discretion to cancel any interest payment at any time for any reason.
- Automatic conversion into ordinary shares occurs if the CET1 ratio falls below 7.0% (current CET1 ratio is 14.0%).
- Net proceeds to HSBC are approximately $1,485,000,000 (after 1.00% underwriting discount).
- Proceeds will be used for general corporate purposes and to maintain or strengthen the capital base.
- The securities are subject to UK bail-in powers, meaning they can be written down or converted to equity by regulators.
- HSBC had a CET1 ratio of 14.0% as of March 31, 2026, well above the 7.0% trigger.
- HSBC had total assets of US$3,306,011 million and total shareholders' equity of US$196,819 million as of March 31, 2026.
Financial Impact
HSBC is raising $1.5 billion in AT1 capital. Net proceeds after underwriting discount are approximately $1.485 billion. The securities carry a 6.750% coupon for the first 7 years, resetting thereafter.
Risk Factors
- Interest payments can be cancelled at HSBC's sole discretion at any time.
- Securities are perpetual with no fixed maturity; principal may never be repaid.
- Automatic conversion into ordinary shares if CET1 ratio falls below 7.0%, which could result in significant loss of value.
- Subject to UK bail-in powers, which could result in write-down or conversion to equity.
- Interest rate resets every 5 years after 2033 and may be lower than the initial 6.750% rate.
- Limited remedies for holders; no acceleration rights except in winding-up.
Market Snapshot
Investment Themes
Documents Analyzed
This report is based on 5 SEC documents filed with EDGAR.
| Document | Accession Number |
|---|---|
| 424B5 Filing (Primary) | 0001193125-26-218875 |
| Document: d215009dexfilingfees.htm | 0001193125-26-218875 |
| Document: 0001193125-26-218875-index-headers.html | 0001193125-26-218875 |
| Document: 0001193125-26-218875-index.html | 0001193125-26-218875 |
| Document: 0001193125-26-218875.txt | 0001193125-26-218875 |
Filters
| Type | Now | ||||
|---|---|---|---|---|---|
May 29, 2026 21w ago | 6-K | $18.24 $19.13 | ▲ +4.88% | ▲ +6.67% | $18.16 (−0.44%) |
May 29, 2026 21w ago | 6-K | $18.24 $19.13 | ▲ +4.88% | ▲ +6.67% | $18.16 (−0.44%) |
May 27, 2026 21w ago | 6-K | $18.50 $18.58 | ▲ +0.43% | ▲ +2.33% | $18.16 (−1.84%) |
May 26, 2026 22w ago | 25-NSE | $18.50 $17.65 | ▼ −4.59% | ▼ −2.65% | $18.16 (−1.84%) |
May 26, 2026 22w ago | 25-NSE | $18.50 $17.65 | ▼ −4.59% | ▼ −2.65% | $18.16 (−1.84%) |
May 26, 2026 22w ago | 6-K | $18.50 $17.65 | ▼ −4.59% | ▼ −2.65% | $18.16 (−1.84%) |
May 21, 2026 22w ago | 6-K | $17.65 $19.23 | ▲ +8.95% | ▲ +8.62% | $18.16 (+2.89%) |
May 12, 2026 23w ago | 424B5 | $17.20 $18.10 | ▲ +5.23% | ▲ +6.96% | $18.16 (+5.58%) |
May 12, 2026 23w ago | 6-K | $17.20 $18.10 | ▲ +5.23% | ▲ +6.96% | $18.16 (+5.58%) |
May 8, 2026 24w ago | 424B5 | $16.90 $17.64 | ▲ +4.38% | ▲ +4.68% | $18.16 (+7.46%) |
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