HSBC launches tender offers for nine note series totaling $8.26 billion

By Rebecca Melvin

New York, Nov. 17 – HSBC Holdings plc announced nine separate offers to purchase for cash any and all of the notes in nine series totaling $8,261,539,000 outstanding principal amount.

The offers began at 10 a.m. ET on Nov. 17 and will expire at 5 p.m. ET on Nov. 24.

HSBC is offering to purchase the following notes, with the notes listed in order of acceptance priority level:

• $2 billion outstanding 4% senior notes due March 30, 2022 (Cusip: 404280AN9) at a price to be calculated using the 0.375% U.S. Treasury due March 31, 2022 and a fixed spread of 10 basis points;

• $1,541,839,000 outstanding 2.95% senior notes due May 25, 2021 (Cusip: 404280AY5) at a price to be calculated using the 2.625% U.S. Treasury due May 15, 2021 and a fixed spread of 10 bps;

• $638,128,000 outstanding 2.65% senior notes due Jan. 5, 2022 (Cusip: 404280BF5) at a price based on the 1.625% U.S. Treasury due Dec. 31, 2021 and a fixed spread of 10 bps;

• $417,483,000 outstanding 4.875% senior notes due Jan. 14, 2022 (Cusip: 404280AL3) at a price based on the 1.625% U.S. Treasury due Dec. 31, 2021 and a fixed spread of 10 bps;

• $755,193,000 outstanding floating-rate senior notes due Jan. 5, 2022 (Cusip: 404280BG3) at a fixed price of $1,015.70 per $1,000 principal amount;

• $978,489,000 outstanding 3.4% senior notes due March 8, 2021 (Cusip: 404280AV1) at a price based on the 1.125% U.S. Treasury due Feb. 28, 2021 and a fixed spread of 5 bps;

• $848,554,000 outstanding 5.1% senior notes due April 5, 2021 (Cusip: 404280AK5) at a price based on the 1.25% U.S. Treasury due March 31, 2021 and a fixed spread of 5 bps;

• $570,318,000 outstanding floating-rate senior notes due May 25, 2021 (Cusip: 404280AZ2) at a fixed price of $1,008.00 per $1,000 principal amount; and

• $511,535,000 outstanding floating-rate senior notes due March 8, 2021 (Cusip: 404280AX7) at a fixed price of $1,006.10 per $1,000 principal amount.

The consideration for each series of fixed-rate notes will be calculated at or around 11 a.m. ET on Nov. 24.

In addition to the consideration, holders will receive accrued interest to but excluding the settlement date, which is expected to be Nov. 30.

Each offer is independent of the other offers.

HSBC expects to finance the tender offers with proceeds from a proposed issuance of new senior debt securities in one or more series, along with cash on hand if necessary. The tender offers will be conditioned on completion of the new notes issuance.

HSBC will announce around 10 a.m. ET on Nov. 18 the total amount available to fund the tender offers.

For any series of notes, the financing condition is met if the total available amount is equal to or greater than the sum of (a) the consideration necessary to purchase all tendered notes of that series (excluding accrued interest), plus (b) the aggregate consideration necessary to purchase all tendered notes of all series having a higher acceptance priority level than that series, other than excluded notes.

If the financing condition is not met for a particular series of notes, those notes will not be accepted for purchase and will be excluded from the offer.

In addition, if there is any series of notes having a lower acceptance priority level for which the financing condition is satisfied, then all notes of that series having a lower acceptance priority level will be accepted for purchase, and the financing condition will be applied at each subsequent acceptance priority level until there is no series of notes with a lower acceptance priority level to be considered for purchase for which the financing condition is met.

The issuer noted that it is possible that any series of notes with any acceptance priority level will fail to meet the financing condition and therefore will not be accepted for purchase even if one or more series with a lower financing condition is accepted for purchase. If any series is accepted for purchase under the offers, all notes of that series that are tendered will be accepted for purchase. As a result, no series of notes accepted for purchase will be prorated.

Tenders may be withdrawn at any time prior to 5 p.m. ET on Nov. 24.

The issuer said the purpose of the offers is to improve its liabilities structure, because the notes cease to qualify as eligible liabilities items under CRR once they have a residual maturity of less than 12 months. CRR refers to regulation (EU) No 575/2013 of the European Parliament and of the Council of June 26, 2013 on prudential requirements for credit institutions and investment firms and amending regulation (EU) No 648/2012.

HSBC Bank plc (+44 20 7992 6237, 212 525-5552 or 888 HSBC-4LM, liability.management@hsbcib.com) is the dealer manager for the offers.

Global Bondholder Services Corp. (866 470-4300 or, for banks and brokers, 212 430-3774) is the information agent.

The banking and financial services company is based in London.

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