Newly Issued Bond: HSBC USD Bonds; IPG : 5.47% – 5.95%

iFAST Research Team
iFAST Research Team05 Aug 2026 280 Views
Newly Issued Bond: HSBC USD Bonds; IPG : 5.47% – 5.95%

  • HSBC plans to issue 6-year and 11-year senior unsecured USD bonds, with initial price guidance of 5.47% and 5.95% respectively (equivalent to the 5-year U.S. Treasury yield + 115 bps and the 10-year U.S. Treasury yield + 135 bps).
  • The issuer currently carries credit ratings of A- / A+ (S&P / Fitch) with a stable outlook. The two new USD bonds are expected to receive the same A- / A+ ratings from S&P and Fitch.
  • Notably, both bonds include call options. The issuer can redeem the 6-year bond in year 5 and the 11-year bond in year 10. If the bonds are not called, they will switch to floating-rate notes, with the coupon set at SOFR plus the initial credit spread (to be determined). Interest will be paid quarterly.
  • HSBC was founded in 1865 and primarily provides commercial banking, personal banking, wealth management and investment services. The bank is listed on the Hong Kong Stock Exchange (stock code: 5.HK) with a current market capitalisation of approximately HK$2.8 trillion.
  • In the 1H of 2026, HSBC continued to simplify its structure and focus on core markets including the UK, Hong Kong, and International Wealth and Premier Banking. Excluding notable items, total revenue reached US$38.2 billion, up 6% YoY. Of this, fee and other income from the Wealth business rose 18% to US$5.5 billion, while Wholesale Transaction Banking grew 4%. Banking net interest income increased to US$22.9 billion, with the net interest margin widening from 1.57% to 1.61%. Profit before tax (excluding notable items) stood at US$20.4 billion, up 6% YoY, and annualised return on tangible equity (RoTE) reached 19.1%, reflecting solid core performance.
  • It is worth noting that expected credit losses (ECL) rose 21% YoY to US$2.4 billion in the first half, equivalent to an annualised 0.47% of average customer loans (compared with 0.42% in the 1H of 2025). Of this, approximately US$0.4 billion related to a UK fraud-linked exposure, about US$0.2 billion to Hong Kong commercial real estate, and additional prudent provisions reflecting uncertainty from the Middle East conflict. Overall, the scale of these charges did not have a material impact on Group profitability and mainly reflected management’s more cautious stance toward geopolitical risks.
  • As of 30 June 2026, the Group’s Common Equity Tier 1 (CET1) ratio stood at 14.1%, down from 14.9% at the end of 2025. The decline was mainly driven by the privatisation of Hang Seng Bank (approximately 110 bps impact), dividend distributions and an increase in risk-weighted assets. The ratio remains within the Group’s self-set target range of 14.0%–14.5% and well above regulatory requirements. Management has indicated it will continue to manage the CET1 ratio within this range and has resumed share buy-backs (up to US$1 billion) following the privatisation, demonstrating a solid and flexible capital structure.
  • On the liquidity front, HSBC held US$714 billion of high-quality liquid assets (HQLA). The liquidity coverage ratio (LCR, average of the preceding 12 months) was 134%, slightly lower than 137% at the end of 2025, but still comfortably above the 100% regulatory minimum. Liquidity remains stable and healthy.
  • Of the two new bonds, the 6-year bond is guided at 5.47% and the 11-year at 5.95%. Both offer a degree of attraction. Given that the 6-year bond carries lower duration risk than the 11-year bond, we believe investors may prioritise the 6-year issue. However, investors should note that the final issue yield may not be as high as the initial guidance.

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