Moody's Affirms HSBC's Ratings, Hails Hang Seng Bank Deal as Credit Positive

Moody's has affirmed HSBC Holdings' ratings, citing the Hang Seng Bank deal as credit positive in the midterm. The deal strengthens HSBC's position in Hong Kong and enhances its ability to serve clients in the region. Moody's also notes HSBC's solid balance sheet and diversified revenue streams.

Moody's Investors Service has affirmed HSBC Holdings' credit ratings, citing the proposed acquisition of Hang Seng Bank as a credit positive factor in the midterm. The ratings agency noted that the deal strengthens HSBC's position in Hong Kong and enhances its ability to serve clients in the region HSBC Holdings (HSBC) was downgraded to a Hold Rating at Jefferies^[1].

According to Moody's, the acquisition aligns with HSBC's strategic priority to grow its business in Hong Kong, one of its home markets. The deal is expected to be funded with HSBC's own financial resources and is anticipated to be accretive to earnings per ordinary share HSBC Proposes to Acquire, Privatize Hong Kong's Hang Seng Bank^[2].

HSBC Holdings' latest earnings release for the quarter ending June 30 showed a quarterly revenue of $14.41 billion and a net profit of $4.63 billion, compared to $58.73 billion in revenue and $6.53 billion in net profit last year HSBC Holdings (HSBC) was downgraded to a Hold Rating at Jefferies^[1].

The proposed acquisition of Hang Seng Bank is valued at 290 billion Hong Kong dollars ($37.27 billion), with HSBC offering HK$155 for each share, a 33% premium over the 30-day average closing price of HK$116.5 per share HSBC Proposes to Acquire, Privatize Hong Kong's Hang Seng Bank^[2].

Moody's also highlighted HSBC's solid balance sheet and diversified revenue streams, noting that the deal is expected to bolster the company's financial health and operational efficiency.