Finance

HSBC Holdings plc Announces Multi-Billion-Dollar Note Repurchase Offers

LONDON, May 8, 2024 – HSBC Holdings plc, a leading financial group, has disclosed its planned commencement of four distinctive cash purchase offers for outstanding notes. This major corporate maneuver, referred to as the 'Offers,' is expected to initiate at approximately 10:00 a.m. New York City time today, May 8, 2024. Interested parties are invited to review the offer documents available at HSBC's offer page starting from the launch time.

Offer Details and Conditions

Each series of notes involved in these Offers is subject to particular terms and conditions detailed in the Offer to Purchase dated May 8, 2024, and a related notice of guaranteed delivery. Collectively, the documents pertaining to this transaction are known as the 'Offer Documents.' At the time of the Offer to Purchase, the combined outstanding principal amount subject to the Offers is a staggering $10,000,000,000, denoted in U.S. dollars.

Structuring the Repurchase Strategy

The notes in question, as grouped in the Offer Documents, differ in characteristics such as interest rate, maturity date, and CUSIP number—a unique identifier for the securities. The table below elucidates the details of each note series included in the Offers:

1. 3.900% Senior Unsecured Notes due 2026 (May 2026 Notes) with a $2,500,000,000 outstanding principal amount
2. 4.300% Senior Unsecured Notes due 2026 (March 2026 Notes) with a $3,000,000,000 outstanding principal
3. 1.589% Fixed Rate/Floating Rate Senior Unsecured Notes due 2027 (May 2027 Notes) with a $2,000,000,000 outstanding principal amount
4. 2.251% Fixed Rate/Floating Rate Senior Unsecured Notes due 2027 (November 2027 Notes) with a $2,500,000,000 outstanding principal amount

Each series bears an Acceptance Priority Level, with the May 2026 Notes and the March 2026 Notes both having a fixed spread of +20 basis points (bps) over their respective reference securities, and the May 2027 Notes and the November 2027 Notes at +45 bps. Notably, HSBC will prioritize accepting notes based on their Acceptance Priority Level, subject to the Maximum Tender Amount Condition and the New Issue Condition.

Acceptance and Expiration

HSBC's Offers will remain open until 5:00 p.m. New York City time on May 14, 2024, unless extended or earlier terminated at the company's discretion. Noteworthy is the provision for notes to be validly withdrawn before the expiration, but after the Withdrawal Date, extensions and terminations are at HSBC's sole judgment. The expected Settlement Date is slated for May 17, 2024. Each Offer stands alone, meaning that HSBC maintains the right to separately terminate, amend, or waive the conditions of any individual Offer.

The Calculation of Consideration

The financial consideration extended to holders whose notes are accepted in the Offers is detailed exhaustively. The Consideration pertains to every $1,000 principal amount of each series of notes and is payable in cash on the Settlement Date. Expected to be assessed by 11:00 a.m. New York City time on May 14, 2024, the Consideration depends on a formula factoring in an 'Offer Yield'—the sum of a 'Reference Yield' (determined by HSBC's Dealer Manager) and a series-specific Fixed Spread.

The exact amount payable for the Consideration will be the present value of $1,000 principal amount of such Notes, discounted at the applicable Offer Yield, minus any Accrued Interest per $1,000 principal amount. This detailed financial calculus ensures transparent and fair valuation of the repurchased notes.

Allocation of New Notes

In concurrence with the offers, HSBC forecasts the inception of a new series of senior unsecured debt securities—the 'New Notes.' These prospective issuances are not subjected to the Offers, and no assurance exists regarding the completion of the Proposed Issuance.

HSBC's execution of each Offer is beholden to particular terms and conditions laid out in their Offer Documents. This includes the 'Maximum Tender Amount Condition,' implicating that the Company's obligation to complete an Offer for any particular series of Notes is contingent upon the successful completion of the Proposed Issuance.

There exists a possibility that some series with an Acceptance Priority Level greater than 1 will not meet the Maximum Tender Amount Condition. Hence, those series might not be accepted for purchase despite other series being accepted. The Maximum Tender Amount Condition dictates a cumulative cap of $5,000,000,000 for the Offers.

The Company accentuates the right to modify or abandon any conditions of the Offers in its absolute discretion, reliant on prevailing laws. It may extend any Offer, amend terms, or accept tenders without prior notice, adhering strictly to statutory regulations.

Considerations for Investors and Media

HSBC Holdings plc has appointed HSBC Bank plc as the Dealer Manager for these extensive Offers. Any questions can be directed to the Dealer Manager at UK: +44 (0)20 7992 6237, US: +1 (212) 525-5552 (Collect) or +1 (888) HSBC-4LM (Toll Free). Inquiries may also be emailed to [email protected]

Global Bondholder Services Corporation serves as the Information Agent, available to address queries or requests for Offer Documents at +1 (855) 654-2014 or +1 (212) 430-3774 for banks and brokers.

Holders intending to partake in any Offer must note their respective intermediary deadlines for tender instruction submissions, as these will precede the dates specified in the Offer Documents.

Regulatory Compliance and Offer Conditions

This announcement is purely informational and does not exhibit an offer to purchase or the solicitation of an offer to purchase or sell any securities. Actual offers are only made through the Offer to Purchase, urging Note holders to examine the document thoroughly prior to any decision-making regarding the Offers.

HSBC clarifies that the communication and Offer materials have been tailored to comply regulations and exemptions within various jurisdictions, such as the United Kingdom, Belgium, Italy, Hong Kong, Canada, France, and others. Specific attention is given to ensuring that the Offers are not misrepresented as public takeover bids or advertised contrary to the stipulations of the pertinent securities laws.

Caution on Forward-Looking Statements and Contact Information

The forward-looking statements within this announcement are grounded on current expectations of future events. Such statements are, however, subject to numerous risks and uncertainties, and there is no assurance given that events will transpire as predicted. Updates on these projections will not be made publicly.

For investor queries, contact Greg Case at [email protected] For media inquiries, contact the Press Office at [email protected]

HSBC reminds the readers that as the Offers unfold, it's essential to keep abreast of developments by consulting the appropriate documents and channels.

Conclusion

HSBC's latest strategic initiative in effectively managing its debt portfolio delineates their consistent efforts in maintaining financial stability and providing value to their shareholders. By spearheading this massive repurchasing venture, HSBC continues to showcase a proactive approach in navigating the intricate realms of global finance.

The Company's structured method for the repurchase offers transparency and seeks to uphold investor confidence during this significant transactional process. With the potential infusion of New Notes and a tactical management of outstanding obligations, HSBC is poised to fortify its position as one of the pre-eminent global banking and financial institutions.

Note to Editors

HSBC Holdings plc, the parent entity of the HSBC Group, is headquartered in London and operates from offices across 62 countries and territories. With mammoth assets of US$3,001bn as of March 31, 2024, HSBC is amongst the titans of banking and financial services globally.

As the dust settles on this major financial announcement, investors and market watchers alike will be observing the outcomes of HSBC's Offers, gauging the impact on the Company's future endeavors.

For continued updates and deeper insights into HSBC's financial machinations, stay tuned to subsequent press releases and announcements, collectively charting the course of one of the banking sector's most influential players.

SOURCE: HSBC Holdings plc

With this latest announcement from HSBC Holdings plc, the financial world once again turns its eyes to the strategies that shape the industry, eagerly anticipating the ripples that will emanate from this sizable note repurchase maneuver.

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