NEWS | Wednesday, 17 September 2008

Interest on HSBC bond issue “whopping high”

David Darmanin

HSBC Bank Malta p.l.c. announced that it is offering €25 million in 5.90 per cent per annum subordinated bonds redeemable in 2018, which terms have been described by a local market analyst as “whopping high”.
But when the bank was approached to explain why it was offering the rates at terms that seem too good to be true, a spokesperson for HSBC insisted that the 5.90 per cent is in line with what financial institutions are paying on international euro bond issues.
“Over the past year, the bond market has changed and interest rate spreads for corporates have widened when compared to treasuries,” she said.
This newspaper is informed that the bank started promoting the bond issue to stockbrokers last week as it intended to sell half by pre-placement within a week and the rest to the public by the week after.
The bond issue is subject to an over-allotment option not exceeding €5 million. The nominal value of the bonds on offer will be repayable in full upon redemption. Applications can be made for a minimum of €2,500 and thereafter in multiples of €100.
“We believe this bond issue represents a good investment opportunity for the local market with an attractive rate of interest,” said HSBC Bank Malta’s Chief Executive Officer, Alan Richards. “We think it provides a good long term investment opportunity for both small investors and institutions.”
The Bank has lodged an application for the listing of the bonds on the Malta Stock Exchange. Charts Investment Management Service Ltd have been mandated to act as sponsoring stockbrokers.