HSBC announced on Monday that it intends to redeem at par US$1.95bn of its perpetual legacy capital instruments, which had been trading in the low 70s.
The discount perpetual securities, often known as "discos", were issued in the 1980s and are grandfathered as Tier 2 capital until 2025.
HSBC said on Monday that it will redeem three series of its undated floating-rate primary capital notes issued by HSBC Bank plc, comprising US$300m and US$750m trades callable in June and a US$500m trade callable in September.
The bank said it will also redeem a US$400m instrument issued by Hongkong and Shanghai Banking Corporation, which is callable in July.
The notes had all been quoted at cash prices of 72–72.50 at Monday's open but traded up to just below par after the announcement, according to Tradeweb.
While market participants have said the bonds could have offered HSBC attractively priced funding for perpetuity if kept outstanding, the notes' coupons each reference US dollar Libor, which is being phased out.
Carlo Pellerani, HSBC's group treasurer, indicated on an investor call in February that the bank would therefore imminently offer holders some form of "remediation".
Corrected story: Corrects bond size in third paragraph