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.”
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