UBS released two bail-in notes on March 17 totalling CHF2.75bn ($2.97bn) and, as of today, the company is providing the buyers cash to buy the notes back.
Although UBS stated that it has fulfilled all of its obligations since the notes’ issuance, it is now proposing to purchase the notes at their separate re-offer prices.
On March 19th, UBS agreed to buy its rival in a government-brokered deal aimed at preventing a financial market selloff prompted by the failure of Silicon Valley Bank earlier this month.
The value of the bank’s senior euro-denominated bonds increased.
UBS is doing so “in light of the exceptional corporate actions announced on 19 March 2023, shortly after the issue date,” it said in the statement. “The Issuer has decided to launch this exercise as a result of a prudent assessment of these recent developments and the Issuer’s long-term commitment to its credit investors”.
The arrangement goes into effect today, with an early expiration deadline on March 28 and a final deadline on April 4.
S&P Global Inc. reformed its outlook on UBS Group’s A- rating to negative due to execution risk from the acquisition but maintained a stable outlook on the operating firm.
The notes in question, which were issued on March 17th include:
- A 1.5 bn franc fixed rate note with a 4.625% due in March 2028.
- A 1.25 bn franc fixed rate note with a 4.75% due in March 2032.
With the help of the Swiss National Bank (SNB), UBS completed its takeover and rescue of Credit Suisse. The measure was intended to provide relief to the troubled Swiss bank and to avert a global banking crisis.