HSB.PR.E Closes (Finally!) at Premium on Heavy Volume

HSBC Bank of Canada has announced:

has completed the offering of 10 million Non-Cumulative 5-Year Rate Reset Class 1 Preferred Shares Series E (the “Preferred Shares Series E”), issued at a price of C$25.00 per share to raise gross proceeds of C$250 million. The offering was made through a syndicate of underwriters led by HSBC Securities (Canada) Inc. and Scotia Capital Inc. The underwriters exercised an option to purchase 3 million Preferred Shares Series E in addition to the 7 million shares that they had previously agreed to purchase. The Preferred Shares Series E commenced trading today on the Toronto Stock Exchange under the ticker symbol HSB.PR.E.

This was the Fixed Reset 6.60%+485 issuee that had originally been scheduled to close on March 31 but had to be pulled when S&P downgraded HSBC Holdings, its parent. It would appear that HSBC Canada is much happier about issuing press releases when events proceed as expected! They did not acknowledge the problem until a press release was issued after 8pm on April 1.

To a point, I feel sorry for these guys. The downgrade was beyond the control of the Canada unit and the timing was horrible. But only to a point. There should have been a press release as soon as it was known that there was a problem … but then, HSBC is a huge organization, and nobody ever got anywhere in a huge organization (and many small ones!) by highlighting events that the corporation would rather forget (or, even better, not know in the first place). What do you think caused the credit crisis, anyway?

Be that as it may, the vital statistics for HSB.PR.E are:

Maturity Type : Call
Maturity Date : 2014-07-30
Maturity Price : 25.00
Evaluated at bid price : 25.20
Bid-YTW : 6.51 %

It traded 615,220 shares in a range of 24.98-23 before closing at 25.20-23, 40×6.

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