UBS Resumes Selling Controversial Bonds Amid Credit Suisse Fallout

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Source: CNBC
UBS Resumes Selling Controversial Bonds Amid Credit Suisse Fallout
Photo: CNBC
TL;DR

UBS has resumed selling Additional Tier 1 (AT1) bonds, the same type of bonds that caused controversy during its emergency rescue of Credit Suisse. The Swiss banking giant is marketing two tranches of U.S. dollar AT1 bonds, with yields around 10% and 10.125%. AT1 bonds are considered risky and were introduced after the 2008 financial crisis to divert risk away from taxpayers. Fitch has assigned the new AT1 notes a BBB rating, four notches below UBS Group's overall viability rating. The bonds will initially have a permanent write-down mechanism, but UBS plans to replace it with an equity conversion mechanism if approved by the annual general meeting.

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