TIDMHSBA
RNS Number : 6412D
HSBC Holdings PLC
22 June 2023
22 June 2023
UPDATE ON USD LIBOR TRANSITION
FOR HSBC HOLDINGS PLC SECURITIES
Following the announcement [1] by the Financial Conduct
Authority (the 'FCA') that U.S. dollar LIBOR ('USD LIBOR') will no
longer be available or representative after 30 June 2023 (the
'Cessation Date'), HSBC Holdings plc ('HSBC' or the 'Company') is
today providing an update regarding certain securities, as listed
in the Annexes to this announcement, that (i) use USD LIBOR as a
benchmark for determining coupons [2] , (ii) have maturity dates
which occur after the Cessation Date and (iii) are governed by New
York law (the 'USD LIBOR Instruments').
After the Cessation Date, the relevant USD LIBOR rate in
relation to each USD LIBOR Instrument is expected to be replaced
with the CME Term SOFR Reference Rate published for the
corresponding tenor, as administered by CME Group Benchmark
Administration, Ltd. (or any successor administrator thereof)
('Term SOFR'), plus a tenor spread adjustment, in accordance with
the U.S. Adjustable Interest Rate (LIBOR) Act of 2021 (the 'LIBOR
Act') and related regulations.
The replacement of USD LIBOR with Term SOFR plus a tenor spread
adjustment will be effective for determinations under the terms of
the USD LIBOR Instruments that are made after the Cessation Date,
starting from the applicable First Non-USD LIBOR Interest Payment
Date (as indicated in the Annexes to this announcement), with Term
SOFR being determined by the calculation agent on the related
Interest Determination Date, but will not affect any determinations
made on or prior to the Cessation Date.
The terms of each USD LIBOR Instrument are set forth in the
applicable base prospectus and relevant prospectus supplement(s),
as listed in the Annexes to this announcement. After the Cessation
Date, the terms of the USD LIBOR Instruments will be deemed to be
amended as described in this announcement, including with respect
to Benchmark Replacement Conforming Changes (as described below).
All other terms of the USD LIBOR Instruments will remain
unchanged.
All capitalised terms used but not defined herein have the
meanings assigned thereto in the underlying disclosure
documentation for the relevant USD LIBOR Instrument or in the LIBOR
Act, as applicable.
USD LIBOR Instruments
Each USD LIBOR Instrument falls into one of the following
categories.
1. Instrument for which USD LIBOR will automatically be replaced
by the Federal Reserve Board-selected Benchmark Replacement (as
defined below)
Annex 1 identifies the USD LIBOR Instrument for which the
benchmark will transition to Term SOFR plus a specified tenor
spread adjustment after the Cessation Date by operation of law,
pursuant to the LIBOR Act.
The contractual fallbacks in this USD LIBOR Instrument do not
(a) identify a specific benchmark replacement that is not based in
any way on any USD LIBOR value or (b) grant a determining person
the authority to determine a replacement for USD LIBOR. In these
circumstances, the LIBOR Act provides that the replacement
benchmark rate selected by the U.S. Board of Governors of the
Federal Reserve System (the 'Federal Reserve Board') will
automatically replace USD LIBOR. The Federal Reserve Board has
adopted final rules providing that, from (and including) the first
London banking day after the Cessation Date, i.e. 3 July 2023 (the
'LIBOR Replacement Date'), the benchmark replacement for a
three-month tenor of USD LIBOR shall be Term SOFR for a three-month
tenor plus a tenor spread adjustment of 0.26161% (the 'Federal
Reserve Board-selected Benchmark Replacement').
The Federal Reserve Board-selected Benchmark Replacement will
apply to this USD LIBOR Instrument starting from the First Non-USD
LIBOR Interest Payment Date for this USD LIBOR Instrument, with
Term SOFR being determined by the calculation agent on the related
Interest Determination Date (as indicated in Annex 1).
2. Instruments that grant a determining person discretion to
select the Federal Reserve Board-selected Benchmark Replacement
Annex 2 lists the USD LIBOR Instruments that, by their terms,
grant a person the authority to select a replacement benchmark for
USD LIBOR in the event of its discontinuance or cancellation (the
'determining person') and will therefore transition to Term SOFR
plus a tenor spread adjustment after the Cessation Date, pursuant
to such determination. HSBC, as the determining person under the
terms of each of those USD LIBOR Instruments and in accordance with
the provisions of the LIBOR Act, has determined that the Federal
Reserve Board-selected Benchmark Replacement will be the
replacement for USD LIBOR in the case of each such USD LIBOR
Instrument from (and including) the LIBOR Replacement Date.
The Federal Reserve Board-selected Benchmark Replacement will
apply to each USD LIBOR Instrument listed in Annex 2 starting from
the applicable First Non-USD LIBOR Interest Payment Date for the
relevant USD LIBOR Instrument, with Term SOFR being determined by
the calculation agent on the related Interest Determination Date
(as indicated in Annex 2).
3. Instrument that provides for a contractual fallback to Term
SOFR
Annex 3 identifies the USD LIBOR Instrument for which the
benchmark will transition to Term SOFR plus a tenor spread
adjustment after the Cessation Date pursuant to the terms of that
USD LIBOR Instrument. The terms of this USD LIBOR Instrument
provide for USD LIBOR to be replaced by a rate that matches the
Federal Reserve Board-selected Benchmark Replacement if the issuer
determines that a Benchmark Transition Event and the related
Benchmark Replacement Date have occurred and the Interpolated
Benchmark (as each such term is defined in the terms of such USD
LIBOR Instrument) cannot be determined. Each of these conditions
will be satisfied on the LIBOR Replacement Date, such that the
Federal Reserve Board-selected Benchmark Replacement will replace
USD LIBOR for this USD LIBOR Instrument on the LIBOR Replacement
Date in the same manner as described above for the USD LIBOR
Instruments listed in Annexes 1 and 2.
The Federal Reserve Board-selected Benchmark Replacement will
apply to this USD LIBOR Instrument starting from the First Non-USD
LIBOR Interest Payment Date for this USD LIBOR Instrument, with
Term SOFR being determined by the calculation agent on the related
Interest Determination Date (as indicated in Annex 3).
Benchmark Replacement Conforming Changes
Under the LIBOR Act, if the Federal Reserve Board-selected
Benchmark Replacement becomes the benchmark replacement for an
instrument such as the USD LIBOR Instruments listed in Annexes 1
and 2, all Benchmark Replacement Conforming Changes will become an
integral part of the instrument, without the need for a
supplemental indenture to amend the terms of such instrument.
Benchmark Replacement Conforming Changes are technical,
administrative or operational changes, alterations or modifications
that (i) the Federal Reserve Board determines, in its discretion,
would address one or more issues affecting the implementation,
administration and calculation of the Federal Reserve
Board-selected Benchmark Replacement in USD LIBOR contracts; or
(ii) in the reasonable judgment of a person responsible for
calculating or determining any valuation, payment or other
measurement based on a benchmark (a 'calculating person'), are
otherwise necessary or appropriate to permit the implementation,
administration and calculation of the Federal Reserve
Board-selected Benchmark Replacement under or with respect to a USD
LIBOR contract after giving due consideration to any Benchmark
Replacement Conforming Changes implemented by the Federal Reserve
Board.
The Federal Reserve Board has adopted final rules providing that
the following Benchmark Replacement Conforming Changes will become
an integral part of the USD LIBOR Instruments listed in Annexes 1
and 2:
-- Any reference to a specified source for USD LIBOR (such as a
particular newspaper, website, or screen) shall be replaced with
the publication of the Federal Reserve Board-selected Benchmark
Replacement (inclusive of the relevant tenor spread adjustment) by
either the relevant benchmark administrator for the applicable
Federal Reserve Board-selected Benchmark Replacement or any third
party authorised by the relevant benchmark administrator to publish
the applicable Federal Reserve Board-selected Benchmark
Replacement.
o In relation to the USD LIBOR Instruments listed in Annexes 1
and 2, this means that any such references should be substituted
with references to the publication of the CME Term SOFR Reference
Rate for a three-month tenor on the website of its administrator,
i.e. CME Group Benchmark Administration, Ltd.;
-- Any reference to a particular time of day for determining USD
LIBOR (such as 11:00am London time) shall be replaced with the
standard publication time for the Federal Reserve Board-selected
Benchmark Replacement, as established by the relevant benchmark
administrator.
o In relation to the USD LIBOR Instruments listed in Annexes 1
and 2, this means that any such references to a particular time of
day should be substituted with the time of publication of the CME
Term SOFR Reference Rate for a three-month tenor on the
administrator's website at 5:00am U.S. Central Standard Time;
-- To the extent the Federal Reserve Board-selected Benchmark
Replacement is not available or published on a particular day
indicated in the USD LIBOR Instrument as the Interest Determination
Date (as listed in Annexes 1 and 2 below), the most recently
available publication of the Federal Reserve Board-selected
Benchmark Replacement will apply.
Pursuant to the LIBOR Act and Regulation ZZ of 12 C.F.R. Chapter
II, Part 253 (Rule 253), the following additional Benchmark
Replacement Conforming Change will apply to the USD LIBOR
Instruments listed in Annexes 1 and 2:
-- The Interest Determination Date will be the second U.S.
Government Securities Business Day prior to the Interest Reset
Date.
A 'U.S. Government Securities Business Day' means any day except
for a Saturday, a Sunday or a day on which the Securities Industry
and Financial Markets Association recommends that the fixed income
departments of its members be closed for the entire day for
purposes of trading in U.S. government securities.
Under the terms of the USD LIBOR Instrument listed in Annex 3,
HSBC has the right to make Benchmark Replacement Conforming Changes
(as defined in the terms of such USD LIBOR Instrument), without
seeking the holders' consent and without executing a supplemental
indenture to amend the terms of such instrument. HSBC has
determined that the Benchmark Replacement Conforming Changes
applicable to the USD LIBOR Instruments listed in Annexes 1 and 2
will also apply to the USD LIBOR Instrument listed in Annex 3.
HSBC has communicated its determination and adoption of the
Benchmark Replacement Conforming Changes to the trustee, the
calculation agent and the holders of the USD LIBOR Instruments.
HSBC's broader approach to interbank offered rate ('IBOR')
transition
For HSBC's other outstanding securities that include references
to legacy IBORs (including indirect references) in their terms and
that have not been explicitly mentioned herein, HSBC remains
committed to seeking to remediate or mitigate relevant risks
relating to IBOR-demise, as appropriate. HSBC expects to be able to
remediate or mitigate these risks by the relevant calculation
dates, which may occur post cessation of the relevant IBOR.
HSBC will continue to develop its transition plans in relation
to its outstanding securities that reference USD LIBOR, as well as
securities that reference USD LIBOR-referencing swap rates.
This announcement applies only to the USD LIBOR Instruments
listed in the Annexes hereto.
Annex 1
USD LIBOR Instrument for which USD LIBOR will automatically be
replaced by the Federal Reserve Board-selected Benchmark
Replacement
The Federal Reserve Board-selected Benchmark Replacement for
this USD LIBOR Instrument will consist of Term SOFR for a
three-month tenor, plus a tenor spread adjustment of 0.26161%.
ISIN / CUSIP No. Title of USD Interest First Non-USD First Non-USD Underlying
LIBOR Instrument Determination LIBOR Interest LIBOR Interest Disclosure
Date [3] Reset Date [4] Payment Date [5] Documentation
US404280BK42 / $2,500,000,000 Second U.S. 13 March 2027 [6] 13 June 2027 Prospectus dated
404280 BK4 4.041% Fixed Government 22 February 2017
Rate/Floating Securities and Prospectus
Rate Senior Business Day Supplement dated
Unsecured Notes prior to the 6 March 2017.
due 2028 Interest Reset
Date
------------------ ------------------ ------------------ ------------------ ------------------
Annex 2
USD LIBOR Instruments that grant a determining person discretion
to select the Federal Reserve Board-selected Benchmark
Replacement
The Federal Reserve Board-selected Benchmark Replacement for
these USD LIBOR Instruments will consist of Term SOFR for a
three-month tenor, plus a tenor spread adjustment of 0.26161%.
ISIN / CUSIP No. Title of USD Interest First Non-USD First Non-USD Underlying
LIBOR Instrument Determination LIBOR Interest LIBOR Interest Disclosure
Date Reset Date Payment Date Documentation
US404280CA50 / $500,000,000 Second U.S. 11 September 2023 11 December 2023 Prospectus dated
404280 CA5 Floating Rate Government 23 February 2018
Senior Unsecured Securities and Prospectus
Notes due 2025 Business Day Supplement dated
prior to the 4 March 2019.
Interest Reset
Date
------------------ ------------------ ------------------ ------------------ ------------------
US404280BW89 / $750,000,000 Second U.S. 12 September 2023 12 December 2023 Prospectus dated
404280 BW8 Floating Rate Government 23 February 2018
Senior Unsecured Securities and Prospectus
Notes due 2026 Business Day Supplement dated
prior to the 5 September 2018.
Interest Reset
Date
------------------ ------------------ ------------------ ------------------ ------------------
US404280BZ11 / $2,500,000,000 Second U.S. 11 March 2024 11 June 2024 Prospectus dated
404280 BZ1 3.803% Fixed Government 23 February 2018
Rate/Floating Securities and Prospectus
Rate Senior Business Day Supplement dated
Unsecured Notes prior to the 4 March 2019.
due 2025 Interest Reset
Date
------------------ ------------------ ------------------ ------------------ ------------------
US404280BX62 / $2,500,000,000 Second U.S. 12 September 2025 12 December 2025 Prospectus dated
404280 BX6 4.292% Fixed Government 23 February 2018
Rate/Floating Securities and Prospectus
Rate Senior Business Day Supplement dated
Unsecured Notes prior to the 5 September 2018.
due 2026 Interest Reset
Date
------------------ ------------------ ------------------ ------------------ ------------------
US404280BT50 / $3,000,000,000 Second U.S. 19 June 2028 19 September 2028 Prospectus dated
404280 BT5 4.583% Fixed Government 23 February 2018
Rate/Floating Securities and Prospectus
Rate Senior Business Day Supplement dated
Unsecured Notes prior to the 12 June 2018.
due 2029 Interest Reset
Date
------------------ ------------------ ------------------ ------------------ ------------------
US404280CC17 / $3,000,000,000 Second U.S. 22 May 2029 22 August 2029 Prospectus dated
404280 CC1 3.973% Fixed Government 23 February 2018
Rate/Floating Securities and Prospectus
Rate Senior Business Day Supplement dated
Unsecured Notes prior to the 15 May 2019.
due 2030 Interest Reset
Date
------------------ ------------------ ------------------ ------------------ ------------------
Annex 3
USD LIBOR Instrument that provides for a contractual fallback to
Term SOFR
The Federal Reserve Board-selected Benchmark Replacement for
this USD LIBOR Instrument will consist of Term SOFR for a
three-month tenor, plus a tenor spread adjustment of 0.26161%.
ISIN / CUSIP No. Title of USD Interest First Non-USD First Non-USD Underlying
LIBOR Instrument Determination LIBOR Interest LIBOR Interest Disclosure
Date Reset Date Payment Date Documentation
US404280CE72 / $2,000,000,000 Second U.S. 7 November 2024 7 February 2025 Prospectus dated
404280 CE7 2.633% Fixed Government 23 February 2018
Rate/Floating Securities and Prospectus
Rate Senior Business Day Supplement dated
Unsecured Notes prior to the 31 October 2019.
due 2025 Interest Reset
Date
------------------ ------------------ ------------------ ------------------ ------------------
Investor enquiries to:
Greg Case +44 (0) 20 7992 3825 investorrelations@hsbc.com
Media enquiries to:
Press Office +44 (0) 20 7991 8096 pressoffice@hsbc.com
Note to editors:
HSBC Holdings plc
HSBC Holdings plc, the parent company of HSBC, is headquartered
in London. HSBC serves customers worldwide from offices in 62
countries and territories. With assets of US$2,990bn at 31 March
2023, HSBC is one of the world's largest banking and financial
services organisations.
Forward looking statements
This announcement contains forward-looking statements. All
statements other than statements of historical fact are, or may be
deemed to be, forward-looking statements. Forward-looking
statements may be identified by the use of terms such as 'expects,'
'targets,' 'believes,' 'seeks,' 'estimates,' 'may,' 'intends,'
'plan,' 'will,' 'should,' 'potential,' 'reasonably possible',
'anticipates,' 'project', or 'continue', variation of these words,
the negative thereof or similar expressions or comparable
terminology. The Issuer has based the forward-looking statements on
current plans, information, data, estimates, expectations and
projections about, among other things, results of operations,
financial condition, prospects, strategies and future events, and
therefore undue reliance should not be placed on them. These
forward-looking statements are subject to risks, uncertainties and
assumptions about HSBC, as described under 'Cautionary statement
regarding forward-looking statements' contained in HSBC's Annual
Report on Form 20-F for the year ended 31 December 2022, filed with
the U.S. Securities and Exchange Commission ('SEC') on 22 February
2023 (the '2022 Form 20-F') and HSBC's earnings release for the
three-month period ended 31 March 2023, furnished on Form 6-K to
the SEC on 2 May 2023 (the '2023 Q1 Earnings Release'). HSBC does
not undertake any obligation to publicly update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise. In light of these risks, uncertainties
and assumptions, the forward-looking events discussed herein might
not occur. Investors are cautioned not to place undue reliance on
any forward-looking statements, which speak only as of their dates.
No representation or warranty is made as to the achievement or
reasonableness of and no reliance should be placed on such
forward-looking statements. Additional information, including
information on factors which may affect the business of HSBC is
contained in HSBC's 2022 Form 20-F and the 2023 Q1 Earnings
Release.
ends/all
[1] See https://www.fca.org.uk/publication/documents/future-cessation-loss-representativeness-libor-benchmarks.pdf (5 March 2021).
[2] Including securities which feature a fixed-rate coupon which
reverts to a USD LIBOR indexed coupon if not redeemed on the
relevant optional redemption date.
[3] This is the date on which the calculation agent will
determine the rate of interest to be paid on the First Non-USD
LIBOR Interest Payment Date.
[4] This is the date on which the interest rate for the first
floating rate interest period for which interest will be calculated
on the basis of the Federal Reserve Board-selected Benchmark
Replacement (and paid on the First Non-USD LIBOR Interest Payment
Date) will be reset. It falls at the start of such floating rate
interest period.
[5] This is the date on which payment for interest will be made,
referred to as the 'Interest Payment Date', in accordance with the
terms described in the relevant underlying disclosure document.
[6] As Saturday 13 March 2027 is not a business day, this
Interest Reset Date shall be postponed to the next day that is a
business day (i.e. Monday 15 March 2027).
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END
MSCZZGZVDZGGFZM
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June 22, 2023 11:05 ET (15:05 GMT)
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