UBS to market riskiest bank debt after 2-month hiatus
UBS Group AG is marketing subordinated bonds in the first sale of the riskiest bank debt in Europe since January.
The Swiss bank will sell so-called additional Tier 1 notes, which are the first to take losses in a crisis, to yield about 7 percent, according to a person familiar with the matter, who isn't authorized to speak publicly and asked not to be identified. Standard & Poor's is expected to rate the dollardenominated securities at BB, two levels below investment grade, the person said.
The $102 billion market for the junior securities shuttered in mid-January as investors dumped holdings amid concern about bank earnings and the possibility that low capital levels would prompt regulators to prevent coupon payments. The notes got a boost last week after the European Central Bank announced a plan to pay banks to borrow, and the European Commission suggested giving "particular protection" to investors in the debt. "I'm a bit surprised that UBS is the first. The syndicate may be testing the water with a strong name before bringing others."