Standard Chartered plans to issue $1 billion in perpetual convertible securities with a 7% coupon to strengthen its regulatory capital base. The London-headquartered bank will use the net proceeds of $992 million for general business purposes and capital strengthening.
Standard Chartered plans to raise $1 billion through perpetual convertible securities at 7%, using the proceeds to strengthen its regulatory capital base, the bank said Thursday.
The Fixed Rate Resetting Perpetual Subordinated Contingent Convertible Securities, set for issuance on June 8, carry a conversion price of $26.379 per share and can be fully converted into 37.9 million ordinary shares. Net proceeds after expenses are expected at $992 million.
Goldman Sachs reiterated its buy rating on Standard Chartered with a price target of HKD242 following the announcement, according to a note cited by AASTOCKS. The stock rose 0.97% to trade higher on the Hong Kong exchange.
The issuance bolsters Standard Chartered's capital adequacy — a key metric for bank regulators — while the 7% coupon reflects current funding costs for subordinated bank debt. Existing shareholders face potential dilution of about 1.2% based on the bank's roughly 3.1 billion outstanding shares, though the improved capital position may support future lending capacity and dividend distributions. The bank's CET1 ratio stood at 14.6% as of its most recent filing, above the regulatory minimum.
The perpetual structure means the securities have no fixed maturity date, though Standard Chartered can reset the coupon at predetermined intervals. Contingent convertible bonds, or CoCos, automatically convert into equity when a bank's capital ratio falls below a trigger level, making them a loss-absorption mechanism that regulators favor. HSBC, Standard Chartered's larger London-based peer, has also used similar instruments to manage its capital stack, issuing $2 billion in perpetual subordinated debt in 2024.
For Standard Chartered, the $992 million in net proceeds arrives as global banks face tighter capital requirements under the Basel III endgame framework. The bank generates the bulk of its revenue from Asia, Africa and the Middle East, where loan growth has outpaced developed markets. A stronger capital base positions the lender to expand in those regions without breaching regulatory thresholds.
This article is for informational purposes only and does not constitute investment advice.
