UBS Offers $1 Billion AT1s In Fast Start To Year’s Funding Plan
The Swiss lender is offering $1 billion of securities callable in April 2031 at an initial yield of about 8.375%, according to a person with knowledge of the sale.
(Bloomberg) -- UBS Group AG is offering dollar-denominated Additional Tier 1 notes just a day after setting out plans to sell billions more of the risky securities in the coming years.
The Swiss lender is offering $1 billion of securities callable in April 2031 at an initial yield of about 8.375%, according to a person with knowledge of the sale who asked not to be identified because the information is private. It follows UBS’s return to the market in November, when it pulled in $36 billion of orders for $3.5 billion of AT1s across two tranches — a deal that marked a recovery of the market in a tumultuous year.
The new offer comes shortly after the bank outlined its plans to raise as much as $2 billion of the deeply subordinated debt this year and keep lifting a capital buffer by 2029 through the “gradual build of AT1.”
Read more: UBS Is Set to Sell Billions More AT1 Bonds in Coming Years
The market for new AT1s by European banks has been busy this week: Dutch lender ING Groep NV raised more than $1 billion, while Swedbank AB and Jyske Bank A/S sold new debt in dollars and euros, respectively, based on data compiled by Bloomberg.
AT1s — or contingent convertible bonds — were introduced after the financial crisis to ensure bondholders take losses first when a bank is in trouble while taxpayers are off the hook. They suffered the worst day of trading in their history in March after $17 billion of Credit Suisse notes were wiped out as part of the lender’s takeover by UBS.
The market has since recovered, with spreads on a multi-currency index by Bloomberg indicated near their lowest level since last February.
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