UBS has started issuing additional Type 1 capital (AT1)bondinquiryinvestSix months ago, when UBS bailed out Credit Suisse, all such bonds were cancelled, leading to a decline in confidence in the AT1 bond market. Investors willing to bear losses also filed complaints.
Following the release of its single-quarter financial report last month, UBS executives began a tour of investor briefings, the Financial Times (FT) reported, citing people familiar with the matter. During the discussion, he proposed changing the terms of future AT1 bonds to make bondholders more willing to subscribe.
UBS is under pressure to replenish up to $17 billion in AT1 debt over the next few years to make the bank’s stretched capital structure more efficient and free up funds for shareholder returns and M&A opportunities.
However, the Swiss government’s emergency law amendment allowed the Swiss Financial Market Supervisory Authority (FINMA) to sacrifice Credit Suisse AT1 bond holders in order to protect shareholders, resulting in billions of dollars in losses for the respective bond holders, and investors. Still worried.
A bond fund manager who recently met with UBS representatives told the Financial Times: “UBS is desperately trying to solve this problem behind the scenes. They need to explain to investors that the capital structure cannot be reversed. “Will be done and the rules will not be changed.” Again at the last minute.”
One of the options being considered is for UBS to convert AT1 bonds, which were originally designed to be subject to losses in the event of bank failure, to be convertible into equity in the event of such an event. Can be made.
AT1 bonds have no maturity, but are typically repaid by the issuer every five years. Banks generally exercise their right to repay and reissue replacement bonds when able. UBS currently has 700 million Swiss francs ($510 million) of AT1 bonds redeemable at the end of November, and $2.5 billion of AT1 bonds redeemable at the end of January.
Europe collapses after Credit Suisse AT1 bond holders suffer huge lossesCentral bankAnd the Bank of England immediately announced that they would not forgive AT1 loans outright, as FINMA had done. As a result, eurozone banks such as BNP Paribas and BBVA were easily able to find buyers when they returned to the AT1 market this summer.