A sale would mark UBS’ first AT1 transaction since September, according to data compiled by Bloomberg. Since then, Switzerland’s Federal Administrative Court has revoked a 2023 order to zero about US$17 billion ($21.2 billion) of Credit Suisse AT1 notes as part of its takeover by UBS. The court has yet to decide whether the writedown itself will ultimately be reversed, while banking regulator Finma has said it will challenge the ruling.
In December, senior Swiss lawmakers put forward recommendations that would allow UBS to use AT1 bonds instead of equity as capital backing for its foreign units, a move that could ease the impact of tougher capital requirements under consideration.
“UBS spreads have been under a little bit of pressure lately” driven by recent strong performance and the potential to issue more AT1s to meet capital needs,” said Alexander Pelteshki, portfolio manager at Aegon Asset Management. “The current IPTs therefore offer some premium at first blush,” he said, referring to the offering’s initial marketing levels.
Representatives at UBS declined to comment.
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Potential changes in Swiss capital requirements and the Credit Suisse bonds are among uncertainties that “are unlikely to be resolved soon and could continue to be a drag on UBS’ AT1 spreads,” CreditSights head of financials Simon Adamson wrote in a note to clients on Monday.
The sale would be the first AT1 of 2026, a year expected to see relatively limited supply as major banks face modest refinancing needs.
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