UBS Is Back with AT1 Bonds Since Credit Suisse Takeover
UBS has issued its first Additional Tier 1 (AT1) bonds since taking over rival Credit Suisse in March, when $17 billion of these bonds were erased as part of the rescue plan, according to multiple media outlets.
The debt is split into two tranches that can be redeemed in either five or 10 years, according to the FT.
Demand for the newly issued debt instruments could suggest a return of investor confidence after the Swiss bank’s merger with Credit Suisse put the debt market into a tailspin when a slew of bonds were written down.
According to rating agency Standard & Poor’s, the newly issued debt notes could convert into equity in the instance of a so-called viability event, such as a cash injection from the government. The rating agency labeled the bonds ‘BB’.
The new AT1 bonds have yields of roughly 9.625% and 9.75%, respectively, according to Reuters, down from around 10% when the auction began earlier on Wednesday.
