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By Danielle Robinson
NEW YORK, March 23 (IFR) - HSBC demonstrated the huge bid inthe US dollar market for Contingent Convertible capitalsecurities on Monday, when it was swamped with more than US$16bnof orders for a US$2.25bn deal.
The perpetual non-call 10-year Additional Tier 1 security isthe first AT1 by a European bank in the US Yankee market thisyear.
"This is a great outcome for HSBC," said one originationbanker covering financials on Wall St.
The perpetual non-call 10 deal was priced at 6.375%, fromguidance of 6.5% area and initial price thoughts of 6.625% area.
At 6.375%, the pricing offers a 37.5bp premium over theroughly 6.00% yield on its outstanding 6.375% perp non-call 10swith a 2024 call date.
Bankers away from the deal considered the pricing prudent,considering the glut of supply in the US market of late, thesize of the transaction and the fact that it is the first totest the waters for AT1s this year.
"The deal went very well. It's a very good indication thatthe market is there for these products," said one debt capitalmarkets banker covering banks.
The deal was trading at around 101.25 bid in theaftermarket.
It is believed there is at least one other Yankee banklooking to issue an AT1 in dollars, which was looking to see howthe HSBC deal fared before hitting the button.
The new HSBC CoCo will feature a 7% Common Equity Tier 1trigger with equity conversion, and is expected to be rated Baa3by Moody's and BBB by Fitch. (Reporting by Danielle Robinson; Editing by Natalie Harrison)
