HSBC’s rate-hedge reset to generate $1bn bond loss

Unwind of lower-yielding bonds costs $578m in Q3, with another $400m expected by year-end

HSBC is on course to swallow almost $1 billion in crystallised mark-to-market losses this year as it purges its treasury of older and devalued bonds in an effort to catch up with the yield curve.

The bank booked a $578 million loss after disposing of bonds held at fair value in the third quarter, and expects another $400 million hit in Q4 as it wraps up the operation.

In its latest earnings release, HSBC described the sale as a repositioning of its hold-to-collect-and-sell portfolio, a