This site uses cookies to provide you with a great user experience. By using BondbloX, you accept our use of cookies.
UBS’s shareholders voted to change the clauses on its AT1s issued following the events at Credit Suisse last year. As per the clause change, upon the occurrence of a trigger event, these notes will be converted into equity instead of being permanently written down to zero. Credit Suisse’s AT1 holders faced a permanent writedown to zero and thus, they did not receive any benefit despite being ranked above equity shareholders in terms of payment rank. The equity conversion mechanism was added only when UBS returned to the AT1 markets in late-2023. However, it could only be activated once shareholders voted for the change, that concluded yesterday. Bloomberg Intelligence analyst Jeroen Julius notes that the latest shareholder approval “could facilitate further AT1 issuance”. This also comes at a time when Swiss government’s recently announced plan to impose tougher capital requirements for the banking industry including UBS. The government aims to protect the country from a repeat of the Credit Suisse collapse and analysts note that it may see UBS requiring an additional $15-25bn in capital to comply. UBS Chairman Colm Kelleher said, “UBS is not too big to fail”, and that it is one of the best capitalized banks in Europe.
UBS’s AT1s were trading stable with its 5.125% Perps at 94.6, yielding 7.82%.
UBS’s 5.125% Perps have been added on BondbloX and is available for trading in sizes of $1,000.