UBS Group AG returned to the Additional Tier 1 (AT1) market with a $3 billion bond sale that drew strong investor demand, even as questions linger over Swiss capital rules and the unresolved treatment of Credit Suisse's written-down AT1 securities, as reported by AdvisorHub.
Investor orders exceeded $21 billion, giving UBS the flexibility to tighten pricing despite ongoing regulatory uncertainty. The bank issued two tranches of perpetual AT1 notes, each totaling $1.5 billion. One tranche carries a call date in 2031 and yields 6.625 percent, while the other becomes callable in 2036 and yields 7 percent. Those yields came in roughly half a percentage point below initial price guidance.
The offering marked UBS's first AT1 issuance since September, based on Bloomberg data reviewed by AdvisorHub. The timing proved notable given recent legal and regulatory developments in Switzerland. AdvisorHub reports that, since UBS's last AT1 sale, Switzerland's Federal Administrative Court revoked a 2023 order that had written down approximately $17 billion of Credit Suisse AT1 bonds during UBS's emergency takeover of the rival bank. The court has not yet ruled on whether it will ultimately reverse the writedown, and Swiss banking regulator Finma has stated that it plans to challenge the decision.
At the same time, senior Swiss lawmakers recently proposed changes that would allow UBS to use AT1 instruments, rather than common equity, as capital backing for its foreign operations. According to AdvisorHub, that approach could soften the impact of tougher capital requirements currently under review.
AdvisorHub notes that even with the successful sale, analysts continue to flag uncertainty. CreditSights' head of financials, Simon Adamson, wrote that unresolved issues surrounding Swiss capital standards and the fate of the Credit Suisse AT1 bonds are unlikely to reach resolution in the near term and could continue to weigh on UBS's AT1 spreads.
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