HSBC launches US$2.5 billion AT1 bond issue in Hong Kong after market standstill

HSBC Holdings plans to raise US$2.5 billion by issuing two tranches of additional tier-1 (AT1) bonds, marking the reopening of such offerings after the US and Israel war on Iran rattled global financial markets.The biggest lender in Hong Kong and Europe by assets said in a stock exchange filing before the market opened on Wednesday that it intended to issue the AT1 bonds, officially named perpetual subordinated contingent convertible securities, on March 24 to strengthen its capital.The offering comprises US$1.25 billion in five-year bonds at 6.75 per cent per year, and another US$1.25 billion in 10-year bonds at 7 per cent.“The company intends to use the net proceeds from the sale for general corporate purposes and to maintain or further strengthen the bank’s capital base under regulatory requirements,” it said.HSBC had entered into agreements with 33 banks to sell the securities, including Citigroup, Morgan Stanley and Goldman Sachs, the filing said.HSBC says it intends to use proceeds from the sale to strengthen its capital. Photo: Nora TamThis is the first AT1 bond offering since the February 28 outbreak of the war between the US and Israel against Iran, which halted such deals. AT1 bonds are considered high-return but high-risk products for investors.