HSBC: HSBC recently issued an SGD Contingent Convertible security callable in five years (and every five years thereafter if not called).

HSBC: HSBC recently issued an SGD Contingent Convertible security callable in five years (and every five years thereafter if not called). As expected, the coupon is priced at 4.7% below the guidance of 5%. Comparing the implied spread to the current USD paper trading at z+280 bps, we derived a fair value of z+260bps after adjusting for lower reset, one-year longer tenure and higher convertion discount. We believe the current trading price is fair; however, it could possibly trade much lower than this level, given the scarcity of investment grade SGD papers.

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The information and opinions in this report were prepared by AmInvestment Bank Bhd. The investments discussed or recommended in this report may not be suitable for all investors. This report has been prepared for information purposes only and is not an offer to sell or a solicitation to buy any securities. The directors and employees of AmInvestment Bank Bhd. Bhd may from time to time have a position in or with the securities mentioned herein. Members of the AmBank Group Bhd and their affiliates may provide services to any company and affiliates of such companies whose securities are mentioned herein. The information herein was obtained or derived from sources that we believe are reliable, but while all reasonable care has been taken to ensure that stated facts are accurate and opinions fair and reasonable, we do not represent that it is accurate or complete and it should not be relied upon as such. No liability can be accepted for any loss that may arise from the use of this report. All opinions and estimates included in this report constitute our judgment as of this date and are subject to change without notice.

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