New AT1 Bond issue from UBS since Credit Suisse collapse
📌 The much-anticipated AT1 bonds will be sold by UBS and it will be the first time since CS’ write-down of about USD 17 billion debt. According to a person informed about the deal, there should be two tranches of perpetual bonds callable in 5 and 10 years, with prices around 10% and 10.125%, respectively. The total issued amount should hit USD 3 billion.
📌 The market was rocked in March when Credit Suisse’s AT1s were wiped out as part of the UBS rescue package, resulting in the worst daily decline in the asset class’s history. Even though Credit Suisse stockholders were able to retain some value in the transaction, a last-minute change to Swiss legislation made it possible for the write-down to proceed. Several months of the so-called «Switzerland penalty» in the AT1 market saw yields rise over non-Swiss peers as investors attempted to understand how Swiss regulators would handle the instruments going forward.
📌 However, since then, the market has somewhat recovered, with even UBS AT1s rising. With the first offers denominated in euros in June, major banks resumed calling their bonds, and the issuance of bonds has continued. The first European bank to sell an AT1 in dollars since the collapse was BNP Paribas SA. It changed the notes’ terms to ensure that, should its capital ratio drop below a certain threshold, they would convert to shares rather than be written off.