HSBC : Issuance of perpetual subordinated contingent convertible securities (18-page PDF 160KB)

HSBC Holdings plc issuance of perpetual subordinated contingent convertible securities



24 May 2016

HSBC HOLDINGS PLC ISSUANCE OF PERPETUAL SUBORDINATED CONTINGENT CONVERTIBLE SECURITIES

HSBC Holdings plc (the "Company") intends to issue US$2,000,000,000 6.875% Perpetual Subordinated Contingent Convertible Securities (Callable June 2021 and Every Five Years Thereafter) (ISIN US404280BC26) (the "Securities") on 1 June 2016 (the "Issue Date").

The Securities are expected to be admitted to the Official List and to trading on the Global Exchange Market of the Irish Stock Exchange within 30 days of the Issue Date. The denominations of the Securities will be US$200,000 and integral multiples

of US$1,000 in excess thereof.

The Securities are issued pursuant to an indenture dated 1 August 2014 (as supplemented and amended from time to time), as supplemented and amended by a fourth supplemental indenture (the "Securities Indenture"), which is expected to be entered into on the Issue Date. The Company has filed with the Securities and Exchange Commission (the "SEC") a registration statement on Form F-3 (filed on 2 March 2015, as amended on 25 February 2016), which includes a prospectus dated 25 February 2016 (the "Base Prospectus"), and a prospectus supplement dated 24 May 2016 (the "Prospectus Supplement") in connection with the offering of the Securities. Descriptions of the terms of the Securities are qualified in their entirety by the Base Prospectus and the Prospectus Supplement, each of which is available on the SEC's website at http://www.sec.gov.

HSBC Securities (USA) Inc. (the "Sole Structuring Adviser and Book Running Manager")

ANZ Securities, Inc. BBVA Securities Inc BNP Paribas Securities Corp. Credit Agricole Securities (USA) Inc. Commerz Markets LLC Danske Markets Inc. ING Financial Markets LLC Lloyds Securities Inc. Merrill Lynch, Pierce, Fenner & Smith Incorporated Morgan Stanley & Co. LLC Société Générale

Subscription Placing agents

This news release is issued by

HSBC Holdings plc

Registered Office and Group Head Office:

8 Canada Square, London E14 5HQ, United Kingdom Web: www.hsbc.com

Incorporated in England with limited liability. Registered number 617987

UniCredit Capital Markets LLC Wells Fargo Securities, LLC

(the "Joint Lead Managers") BMO Capital Markets Corp.

Credit Suisse Securities (USA) LLC Deutsche Bank AG, London Branch KBC Securities USA, Inc.

Mizuho Securities USA Inc. Nykredit Bank A/S

SMBC Nikko Securities America, Inc.

Standard Chartered Bank

(together with the Sole Structuring Adviser and Book Running Manager and the Joint Lead Managers, the "Underwriters")

Securities Terms Agreement

The Company and the Securities Sole Structuring Adviser and Book-Running Manager (on behalf of the Securities Managers) have entered into a Terms Agreement (which incorporates by reference an Underwriting Agreement - Standard Provisions) dated as of 24 May 2016 in relation to the Securities (the "Securities Terms Agreement"). Pursuant to the Securities Terms Agreement and subject to fulfilment of the conditions set out below in the section headed "Conditions precedent to the purchase", the Securities Managers have agreed severally and not jointly to purchase the respective amounts of Securities set forth in Schedule II of the Securities Terms Agreement, to be issued by the Company on the Issue Date in an aggregate principal amount of US$2,000,000,000.

Conditions precedent to the purchase

The Securities Managers' obligations to purchase and pay for the Securities on the Issue Date are subject to the satisfaction of a number of conditions as of the time of payment of the Securities (the "Closing Time"), including:

1. the absence of any stop order suspending the effectiveness of the Company's registration statement on Form F-3 (or pending or contemplated proceeding for such purpose);

2. the absence of any material adverse change in the financial condition, earnings or general affairs of the Company and its subsidiaries;

3. the Company's compliance in all material respects with all agreements, and satisfaction of all conditions, pursuant to the Securities Terms Agreement and the Securities Indentures;

4. the accuracy in all material respects of the representations and warranties of the Company contained in the Securities Terms Agreement as of the Closing Time;

5. the absence of a downgrade in the rating accorded to the Securities by certain rating agencies;

6. the absence of any change in US or UK taxation directly and materially adversely affecting US purchasers of the Securities or the imposition of exchange controls by the United States or the United Kingdom directly and materially affecting the Company's ability to pay interest or dividends in US dollars; and

7. the timely filing of certain required disclosure documents with the SEC.

Subscribers

The Company intends to offer and sell the Securities to no less than six independent placees (who will be independent individual, corporate and/or institutional investors). To the best of the knowledge of the directors of the Company, information and belief, save as described in the immediately following sentence, each of the placees (and their respective ultimate beneficial owners) will be third parties independent of the Company and are not connected with the Company and its connected persons (as defined in the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "SEHK") (the "Hong Kong Listing Rules")). Pursuant to a waiver granted by the SEHK from strict compliance with certain requirements of the Hong Kong Listing Rules (which waiver is described in an announcement by the Company dated 20 March 2015 and which is available on the Company's website), the Sole Structuring Adviser and Book Running Manager and HSBC Bank plc may hold Securities from time to time for the purposes of market-making transactions.

Principal terms of the Securities

The principal terms of the Securities are summarised as follows:

Issuer	The Company
Aggregate principal amount	US$2,000,000,000
Maturity date	Perpetual
Issue price	100% of the aggregate principal amount
Interest	From (and including) the Issue Date to (but excluding) 1 June 2021, the interest rate on the Securities will be 6.875% per annum. From and including each Reset Date to (but excluding) the next following Reset Date, the applicable per annum interest rate will be equal to the sum of the applicable Mid-Market Swap Rate on the relevant Reset Determination Date and 5.514%. The "Mid-Market Swap Rate" means the rate for

US dollar swaps with a five-year term commencing on the relevant Reset Date which appears on Bloomberg page "ISDA 01" (or such other page as may replace such page on Bloomberg, or such other page as may be nominated by the person providing or sponsoring the information appearing on such page for purposes of displaying comparable rates) (the "relevant screen page") as at approximately 11:00 am (New York time) on the relevant Reset Determination Date, all as determined by the calculation agent. If no such rate appears on the relevant screen page for such five-year term, then the Mid-Market Swap Rate will be determined through the use of straight-line interpolation by reference to two rates, one of which will be determined in accordance with the above provisions, but as if the relevant Reset Period were the period of time for which rates are available next shorter than the length of the actual Reset Period and the other of which will be determined in accordance with the above provisions, but as if the relevant Reset Period were the period of time for which rates are available next longer than the length of the actual Reset Period.
Reset date, reset determination date & reset period	1 June 2021 and each fifth anniversary date thereafter (each, a "Reset Date"). The "Reset Determination Dates" shall be the second business day immediately preceding a Reset Date. Each period from (and including) a Reset Date to (but excluding) the following Reset Date shall be a "Reset Period".
Interest payment dates	Semi-annual on each 1 June and 1 December, commencing 1 December 2016 subject to cancellation or deemed cancellation as described in the Prospectus Supplement.
Interest cancellation	The Company will have sole and absolute discretion at all times and for any reason to cancel (in whole or in part) any interest payment that would otherwise be payable on any interest payment date. In addition, the terms of the Securities restrict the Company from making