UBS has wasted no time in offering AT1 bonds

UBS has wasted no time in offering AT1 bonds
The bank announced its plans Tuesday and is already offering the notes.
FEB 07, 2024
By  Bloomberg

UBS Group 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.”

Other European banks are planning Additional Tier 1 issuance of similar sizes this year. BNP Paribas SA is planning to issue €2.5 billion ($2.7 billion) and Deutsche Bank plans €1 billion to €2 billion of AT1 and Tier 2. 

Santander has planned €4 billion to €5 billion of hybrid issuance in 2024 having already raised €3.8 billion, including prefunding last year, according to various bank earnings and fixed income presentations seen by Bloomberg.

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.

Copyright Bloomberg News

Latest News

Northern Trust names new West Region president for wealth
Northern Trust names new West Region president for wealth

The new regional leader brings nearly 25 years of experience as the firm seeks to tap a complex and evolving market.

Capital Group extends retirement plan services further with a focus on advisors
Capital Group extends retirement plan services further with a focus on advisors

The latest updates to its recordkeeping platform, including a solution originally developed for one large 20,000-advisor client, take aim at the small to medium-sized business space.

Why RIAs are the next growth frontier for annuities
Why RIAs are the next growth frontier for annuities

David Lau, founder and CEO of DPL Financial Partners, explains how the RIA boom and product innovation has fueled a slow-burn growth story in annuities.

Supreme Court slaps down challenge to IRS summons for Coinbase user data
Supreme Court slaps down challenge to IRS summons for Coinbase user data

Crypto investor argues the federal agency's probe, upheld by a federal appeals court, would "strip millions of Americans of meaningful privacy protections."

Houston-based RIA Americana Partners adds $1B+ with former Morgan Stanley director
Houston-based RIA Americana Partners adds $1B+ with former Morgan Stanley director

Meanwhile in Chicago, the wirehouse also lost another $454 million team as a group of defectors moved to Wells Fargo.

SPONSORED How advisors can build for high-net-worth complexity

Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.