HSBC Expected to Cut Dividend, Raise Capital in $17 Billion Shares Offering

This could make Monday's trade interesting.

The Economic Times (India)
HSBC plans $17 bn share sale to raise funds
28 Feb 2009, 1100 hrs IST

SINGAPORE: HSBC, Europe's biggest bank, plans to raise more than 12 billion pounds ($17 billion) in a share sale aimed at propping up its capital base in order to cope with the economic crisis, a media report said on Saturday.

The report said the share issue would likely be announced alongside its full-year 2008 results due on Monday.

The report quoted unidentified people involved in the discussions as saying the offer price for the sale had not been set and the deal could still be postponed.

The bank is also expected to announce a cut in its dividend, the report said.

It said the share sale was underwritten by Goldman Sachs and JPMorgan Cazenove and the deal could set a new record in Britain for a rights issue funded by private investors after Royal Bank of Scotland's 12 billion pound share offering last April.

HSBC has traditionally been one of the best capitalised banks in the world and has not raised capital while rivals have scrambled for cash as the credit crisis has deepened.

Pimco Cancels Dividends

Pimco cancels dividend payments for 6 funds
December 01, 2008: 10:03 AM EST

NEW YORK (Associated Press) - Pacific Investment Management Company Inc. on Monday canceled announced dividend payments for six of its funds, saying the weak market has pushed the value of those funds below legal thresholds.

The dividends declared Nov. 3 that were scheduled for payment Monday will not be paid for Pimco New York Municipal Income Fund, Pimco Municipal Income Fund II, Pimco California Municipal Income Fund II, Pimco Municipal Income Fund III, Pimco California Municipal Income Fund III and Pimco New York Municipal Income Fund III.

"Continued severe market dislocations and recent further erosions in the municipal bond market have caused the values of the Funds' portfolio securities to decline," the company said. As a result, the funds' asset coverage ratios have fallen below 200 percent, it explained, and federal law prohibits a fund from paying or declaring common share dividends below that threshold.

The funds intend to resume paying and declaring dividends as soon as possible, Pimco said. The company said it may consider options including redemption of a portion of its auction rate preferred shares in order to resume dividends in the future.

Pimco is an affiliate of Allianz Global Investors Fund Management LLC, which serves as the funds' investment manager.