UBS sells riskiest bank debt

UBS building

UBS sold $1bn of the riskiest type of bank debt in Europe’s first sale of the bonds since Britain’s vote to leave the European Union.

Bloomberg News reports that the bank issued the additional Tier 1 notes to yield 7.125%, according to a person familiar with the matter, who isn’t authorized to speak publicly and asked not to be identified. The notes are expected to be ranked BB+ by Standard & Poor’s Global Ratings, its highest sub-investment grade, said the person.

The sale is the first in the $106bn market for the junior bonds, which are the first to take losses in a crisis, after issuance stalled on concern the June 23 Brexit vote will throw the U.K. into recession, and as the EU carried out region-wide stress tests on banks. UBS is seeking to take advantage of investor demand for riskier securities as European Central Bank stimulus suppresses yields.

“If anyone was going to re-open the AT1 market, it was going to be UBS,” said Simon Adamson, an analyst at CreditSights in London. “It’s better positioned than a lot of the other banks and has quite a lot of AT1 issuance to do over the next few years.”

To access the complete Bloomberg News article hit the link below:

UBS Reopens Market in Riskiest Bank Debt After Post-Brexit Lull

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