LONDON, March 24 (Reuters) - HSBC Holdings willissue $2.25 billion of bonds that would convert into shares ifthe bank's capital strength falls below a certain level, it saidon Tuesday.
HSBC said the so-called contingent convertible bonds, or"CoCos", would pay annual interest of 6.375 percent. The bondswill convert into shares if HSBC's core equity Tier 1 capitalratio falls below 7 percent.
Bonds that convert into shares or are cancelled when abank's capital falls below a certain level are increasinglybeing sold by banks to improve their capital cushion if they runinto trouble.
Regulators want banks to sell the bonds to provide a biggercushion to prevent the need for taxpayer bailouts that were seenin the 2007/09 financial crisis.
HSBC issued its first of the convertible bonds in September.
(Reporting by Steve Slater; Editing by Mark Potter)
HSBC Holdings (HSBA)