Cost to insure HSBC Finance debt jumps dramatically

Why has HSBC been quiet about HSBC Finance? Because it costs too much to speak, if this morning’s news is any indicator. The cost to insure the debt of HSBC Finance Corp, the U.S. consumer lending arm of HSBC Holdings PLC jumped on Monday following a report that HSBC is mulling options for the lender. The cost to insure HSBC Finance’s debt with credit default swaps jumped to 600 basis points on Monday, or $600,000 per year for five years to insure $10 million in debt, from 390 basis points on Friday, according to Phoenix Partners Group.

HSBC does not need to speak to losses since 2003. HSBC did not speak to any issues, including layoffs. While layoffs, demotions, and restructuring were taking place in the United States, HSBC spoke about layoffs in Malaysia. Now we know why. It simply costs HSBC more money to say anything about future plans at HSBC Finance.

Unfortunately — for HSBC — the entire world knew that something was happening. We went through this last year at this same time. HSBC finally released a short statement that was largely unnoticed by most, except for employees caught up in the restructuring, and our analysts. This year we were determined not to let it happen again, but HSBC has not issued a press release with details of their 2008-2009 restructuring at HSBC Finance.