HSBC Finance gets early tenders for $1.56 billion of 6.676% notes

By Susanna Moon

Chicago, Sept. 19 – HSBC Finance Corp. said investors had tendered $1,555,000,000 of its $2,938,669,000 of outstanding 6.676% senior subordinated notes due Jan. 15, 2021 as of the early tender date of 5 p.m. ET on Sept. 18.

Because the offer has been oversubscribed, HSBC Finance will accept for purchase about 71% of the early tendered notes on a prorated basis, according to a company update on Tuesday.

The total purchase price will be about $1,268,000,000, which represents a total purchase price of $1,148.41 per $1,000 principal amount, excluding accrued interest.

The company said on Sept. 5 that it was tendering for up to $1,104,230,000 of the notes and that it had also entered into an agreement with parent company HSBC Holdings plc under which HSBC Finance will repurchase the $730.77 million of the 6.676% notes held by HSBC Holdings in addition to any notes acquired in the tender.

HSBC Finance will pay the same price to HSBC Holdings as it will pay for early tendered notes unless the tender is not completed, in which case it will pay the average trading price of the notes over the five business days prior to settlement.

The purchase price in the tender offer was set using a fixed spread of 20 basis points over the 1.625% Treasury due Aug. 31, 2022.

Included in the price is an early tender premium of $30.00 per $1,000 principal amount that will only be paid to those who participate by the early tender date.

HSBC Finance will also pay accrued interest up to but excluding the settlement date.

The tender had been set to continue until 11:59 p.m. ET on Oct. 2. But because the offer cap has been reached, the company said it will not accept any more notes for purchase after the early deadline.

Settlement has been set for Sept. 20.

Tenders may not be withdrawn after 5 p.m. ET on Sept. 18.

HSBC Securities (USA) Inc. (888 HSBC-4LM or 212 525-5552) is dealer manager. Global Bondholder Services Corp. (212 430-3774, 866 470-3800, contact@gbsc-usa.com or http://www.gbsc-usa.com/HSBC/) is depositary and information agent.

HSBC Finance is based in New York and owns and services a portfolio of residential real estate loans.

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