HSBC Holdings plc (HSBA), the London-headquartered global banking group, has announced the issuance of US$1,500,000,000 in perpetual subordinated contingent convertible securities carrying a 7.625% interest rate, with the issue date set for 13 November 2026. The securities will be listed on the Global Exchange Market of Euronext Dublin and were structured with HSBC Securities (USA) Inc. acting as sole structuring adviser and book running manager. The deal represents a significant additional tier 1 capital transaction for one of the world's largest banking groups, with interest payments subject to discretionary cancellation rights and automatic conversion provisions tied to HSBC's CET1 capital ratio.

Key Points

  • HSBC Holdings plc (HSBA), registered in England and Wales, headquartered at 8 Canada Square, London
  • HSBC is issuing US$1,500,000,000 of 7.625% perpetual subordinated contingent convertible securities on 13 November 2026
  • Initial interest rate fixed at 7.625% per annum until 13 May 2032, then resetting every five years based on the five-year US Treasury constant maturity rate plus a spread of 3.004%
  • Investors should watch the CET1 ratio trigger level of 7.0%, below which automatic conversion into ordinary shares would occur

HSBC's US$1.5 Billion AT1 Issuance: Structure and Interest Rate Terms

The securities are perpetual in nature, with no maturity date, and will be issued at 100% of their aggregate principal amount. The initial interest rate of 7.625% per annum applies from the issue date until 13 May 2032, following which a reset mechanism applies every five years. From each reset date, the applicable rate will equal the sum of the prevailing five-year US Treasury constant maturity rate and a fixed spread of 3.004%. Interest is scheduled to be paid in arrear on 13 May and 13 November each year, beginning 13 May 2027, subject to cancellation provisions detailed in the prospectus supplement filed with the SEC.

Discretionary Interest Cancellation and Regulatory Restrictions on Payments

A distinctive feature of these contingent convertible securities is that HSBC retains sole and absolute discretion to cancel any interest payment in whole or in part at any time and for any reason. Beyond this discretionary right, the terms also restrict interest payments where the company's distributable items or maximum distributable amount would be exceeded, where the company would not be solvent at the time of payment, or where the UK Prudential Regulation Authority orders cancellation. Cancelled interest is not cumulative and will not be reinstated, a standard feature of additional tier 1 instruments under UK capital adequacy rules.

Capital Adequacy Trigger and Automatic Conversion Into HSBC Ordinary Shares

A capital adequacy trigger event is defined as HSBC's CET1 ratio falling below 7.0%. Should this occur, an automatic conversion takes place within one month, releasing all obligations under the securities in exchange for the issuance of ordinary shares — currently carrying a nominal value of US$0.50 each — to a designated conversion shares depository on behalf of securityholders. HSBC may elect that a conversion shares offer be made instead of delivering ordinary shares directly. Securityholders have no option to convert the instruments themselves at any point.

Euronext Dublin Listing, SEC Registration, and Syndicate of 24 Placing Agents

The securities are expected to be admitted to Euronext Dublin's Global Exchange Market within 30 days of the 13 November 2026 issue date, with denominations starting at US$200,000. The offering is made pursuant to a shelf registration statement filed with the SEC on 23 February 2024, with prospectus supplements dated 5 November 2026 also filed with the regulator. A syndicate of 24 managers participated in the transaction alongside sole structuring adviser HSBC Securities (USA) Inc., including Bank of America, Citigroup, Goldman Sachs, Morgan Stanley, and a range of diversity-focused broker-dealers.