Newly Issued Bond: Standard Chartered USD AT1 Perp; IPG: 7.4%

Standard Chartered intends to issue a USD-denominated Additional Tier 1 perpetual bond, with an initial price guidance of 7.375%. Proceeds from the bond issuance will be used for general corporate purposes and to strengthen the bank’s capital base.
The issuer is currently rated BBB+/A by S&P/Fitch, with a stable outlook. This perpetual bond is expected to be rated BB-/BBB- by S&P/Fitch.
This Additional Tier 1 bond is a type of Contingent Convertible Bond, or CoCo bond. It is an instrument used by banks to supplement their capital base, and therefore includes a loss absorption event mechanism. Bondholders may be required to bear part or all of the losses.
It is worth noting that this bond includes a call option. The issuer may redeem the bond after year 7, on 8 June 2033. If the issuer does not redeem the bond, the coupon rate will reset. The reset coupon rate will be the yield on the 7-year US Treasury plus the initial credit spread, which has yet to be determined.
Standard Chartered is a leading international bank with a history of nearly 170 years. Headquartered in the UK, it serves clients across more than 120 markets globally. Standard Chartered primarily provides personal banking, commercial banking, investment banking and wealth management services. Standard Chartered is listed on the London Stock Exchange and the Hong Kong Stock Exchange, with stock tickers STAN.LD and 2888.HK respectively. Its current market capitalisation is approximately HKD455.7bn.
Standard Chartered delivered strong earnings performance in 2025 and 1Q26. Amid a weaker interest rate environment, non-interest income became the main driver of earnings. In 1Q26, net interest income still rose 1% y/y to USD2.87bn, showing resilience despite interest rate pressure, with overall interest income performance remaining respectable. Non-interest income was strong in 2025, rising 13% y/y. This trend was further reinforced in 1Q26, with non-interest income rising another 16% to USD3.03bn, driven by double-digit growth in Wealth Solutions and Global Banking. Standard Chartered’s 2025 net profit rose 26% y/y to USD5.1bn, while 1Q26 net profit increased 24% to USD1.66bn, reflecting solid profitability.
As of end-March 2026, Standard Chartered’s asset quality remained sound. Its non-performing loan ratio was stable and lower than one to two years ago, steadily declining from a high of 2.62% at end-September 2023 to just 1.95%. On capital, Standard Chartered’s Common Equity Tier 1 capital ratio was 13.4%, slightly lower than 14.2% at end-2024, mainly due to its USD1.5bn share buyback. Nevertheless, its capital level remained clearly above the 10.3% regulatory requirement and within management’s 13% to 14% target range, leaving ample buffer. Meanwhile, its Liquidity Coverage Ratio and Net Stable Funding Ratio stood at 157% and 138% respectively, well above the 100% regulatory minimum requirement.
Considering Standard Chartered’s currently stable operating performance and ample capital buffer, overall credit risk is relatively low, and this new bond is worth investors’ consideration. The new bond’s initial price guidance is as high as 7.4%. Compared with Standard Chartered’s perpetual bond issued in January last year, which is callable in year 7, or 2032, and currently yields only around 7.0%, we believe this new bond, callable in year 7, or 2033, is highly attractive. However, this is an Additional Tier 1 bond. Its repayment priority is lower than ordinary senior unsecured and Tier 2 capital bonds, and its terms are more complex, involving loss absorption features. In addition, it has no fixed maturity date, meaning its duration is longer and its price is more sensitive to interest rate movements. Investors should understand these risks and note that the final issue yield may not be as high as the initial price guidance.

Declaration: For specific disclosure, at the time of publication of this report, IFPL (via its connected and associated entities) and the analyst who produced this report hold NIL positions in the abovementioned securities. This research report was prepared with the assistance of artificial intelligence (AI) tools. iFAST Financial Pte Ltd does not rely exclusively on AI for content generation; the content of this report – including all investment theses, ratings, price targets and conclusions – has been independently reviewed and verified by the research analyst(s) to ensure accuracy and professional integrity.

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