AT1 bond market reopens with HSBC raising US$2.5 billion

Published Wed, Mar 18, 2026 · 09:01 AM

[LONDON] HSBC Holdings sold the first major-currency Additional Tier 1 (AT1) bonds since the Iran conflict began, reopening the risky corner of the credit market.

The lender raised US$2.5 billion through two perpetual notes first callable in 5.5 years and 10 years, according to a source familiar with the matter who asked not to be identified. The bonds will respectively yield 6.75 per cent and 7 per cent, about a half-percentage point tighter than initial marketing levels, the source added.

Issuance of AT1 bonds had ground to a halt in recent weeks, as the dual concerns of the war in the Middle East and banks’ exposure to private credit shook the financial sector. Issuance started the year at a brisk pace, but the last offering came just before hostilities started in late February.

Existing AT1 debt has avoided the worst of the credit market’s sell-off despite its risky nature that would typically mean bigger moves in times of trouble. Investors are hanging on to the bonds for fear of missing out on getting hold of them again at an acceptable price when the market calms down.

“The recent spread widening provides a good opportunity to buy HSBC AT1s at a more attractive level,” Simon Adamson, head of financials at CreditSights, wrote in a note to clients. He saw fair value at the levels the notes are set to price.

HSBC has a £1 billion (S$1.7 billion) AT1 bond that has its first call date in September. The firm is the largest issuer of AT1s globally with more than US$23 billion of the deeply subordinated bonds outstanding.

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Last week, Wells Fargo sold US$2.25 billion of preferred equity, which is the instrument that US banks use to raise AT1 capital. BLOOMBERG