UBS is offering to buy back bonds that were issued days before it agreed to take over troubled rival Credit Suisse, a deal that sent a gauge of its credit risk soaring.
Switzerland’s biggest bank invited holders of its senior unsecured notes due in March 2028 and March 2032, totalling €2.75 billion ($3 billion), to exchange the securities for cash at their respective re-offer price, citing the “exceptional corporate actions” of March 19.
That was the day UBS agreed to buy its rival in a government-brokered deal aimed at containing a financial market sell-off triggered by the collapse of Silicon Valley Bank earlier this month. The bank’s senior euro-denominated bonds rose.
The decision was a “reasonable action to give investors the option to sell back the bonds should they, having known what they know now, have chosen not to invest”, said Andrew Wong, a credit analyst at the Oversea-Chinese Banking Corporation.
The credit risk of UBS has been jolted since concern over Credit Suisse’s fate, and the role UBS would play in it, hit global markets.
After a deal was announced at the weekend, the cost of insuring UBS’s debt for a year soared to a record. The credit default swaps for the holding company also rose above those for its operating company, UBS AG, by the most on record.
“UBS Group is the entity that is taking over the risk from the Credit Suisse acquisition, while its operating company should remain better protected,” Suvi Kosonen, a banking credit analyst with ING Groep, said on Tuesday.
“From that angle it makes sense that the spreads of the group will widen and underperform against the OpCo [operating company].”
S&P Global revised its outlook on its “A-” rating on UBS Group to negative on execution risk from the acquisition, but maintained a stable outlook on the operating company.
The two securities issued on March 17 include a fixed 4.62 per cent note due March 2028, and another at a fixed 4.75 per cent due March 2032.
The buyback offer opens on March 22, with the early expiration deadline on March 28 and the final expiration deadline on April 4.
“The issuer has decided to launch this exercise as a result of a prudent assessment of these recent developments and the issuer's long-term commitment to its credit investors,” UBS said. A bank spokesman declined to comment when contacted.
The bonds were priced in the public market on March 9 and were settled on March 17. There is typically a period of grey market trading between a bond's pricing and settlement.
The two “bail-in” bonds were priced on March 9, around the time that the first signs of trouble emerged at SVB Financial Group.
The 2032 note was indicated at a price of 99.06 cents at 9.40am in London on Wednesday, below its re-offer price of 99.51 cents, according to pricing compiled by Bloomberg.
The 2028 debt was indicated at 99.84 cents with a re-offer price of 99.93 cents.
These securities are risky but they are still safer than Additional Tier-1 notes, which are the most junior bonds in a bank’s debt pile.
“It seems fair and reasonable to let investors think twice if they need to reconsider the risks, which is helpful in shoring up sentiment eventually if not immediately,” said Gary Ng, senior economist at Natixis.
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Film: In Syria
Dir: Philippe Van Leeuw
Starring: Hiam Abbass, Diamand Bo Abboud, Mohsen Abbas and Juliette Navis
Verdict: Four stars
10 tips for entry-level job seekers
- Have an up-to-date, professional LinkedIn profile. If you don’t have a LinkedIn account, set one up today. Avoid poor-quality profile pictures with distracting backgrounds. Include a professional summary and begin to grow your network.
- Keep track of the job trends in your sector through the news. Apply for job alerts at your dream organisations and the types of jobs you want – LinkedIn uses AI to share similar relevant jobs based on your selections.
- Double check that you’ve highlighted relevant skills on your resume and LinkedIn profile.
- For most entry-level jobs, your resume will first be filtered by an applicant tracking system for keywords. Look closely at the description of the job you are applying for and mirror the language as much as possible (while being honest and accurate about your skills and experience).
- Keep your CV professional and in a simple format – make sure you tailor your cover letter and application to the company and role.
- Go online and look for details on job specifications for your target position. Make a list of skills required and set yourself some learning goals to tick off all the necessary skills one by one.
- Don’t be afraid to reach outside your immediate friends and family to other acquaintances and let them know you are looking for new opportunities.
- Make sure you’ve set your LinkedIn profile to signal that you are “open to opportunities”. Also be sure to use LinkedIn to search for people who are still actively hiring by searching for those that have the headline “I’m hiring” or “We’re hiring” in their profile.
- Prepare for online interviews using mock interview tools. Even before landing interviews, it can be useful to start practising.
- Be professional and patient. Always be professional with whoever you are interacting with throughout your search process, this will be remembered. You need to be patient, dedicated and not give up on your search. Candidates need to make sure they are following up appropriately for roles they have applied.
Arda Atalay, head of Mena private sector at LinkedIn Talent Solutions, Rudy Bier, managing partner of Kinetic Business Solutions and Ben Kinerman Daltrey, co-founder of KinFitz
At a glance
Global events: Much of the UK’s economic woes were blamed on “increased global uncertainty”, which can be interpreted as the economic impact of the Ukraine war and the uncertainty over Donald Trump’s tariffs.
Growth forecasts: Cut for 2025 from 2 per cent to 1 per cent. The OBR watchdog also estimated inflation will average 3.2 per cent this year
Welfare: Universal credit health element cut by 50 per cent and frozen for new claimants, building on cuts to the disability and incapacity bill set out earlier this month
Spending cuts: Overall day-to day-spending across government cut by £6.1bn in 2029-30
Tax evasion: Steps to crack down on tax evasion to raise “£6.5bn per year” for the public purse
Defence: New high-tech weaponry, upgrading HM Naval Base in Portsmouth
Housing: Housebuilding to reach its highest in 40 years, with planning reforms helping generate an extra £3.4bn for public finances
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Killing of Qassem Suleimani
MOUNTAINHEAD REVIEW
Starring: Ramy Youssef, Steve Carell, Jason Schwartzman
Director: Jesse Armstrong
Rating: 3.5/5
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Q&A with Dash Berlin
Welcome back. What was it like to return to RAK and to play for fans out here again?
It’s an amazing feeling to be back in the passionate UAE again. Seeing the fans having a great time that is what it’s all about.
You're currently touring the globe as part of your Legends of the Feels Tour. How important is it to you to include the Middle East in the schedule?
The tour is doing really well and is extensive and intensive at the same time travelling all over the globe. My Middle Eastern fans are very dear to me, it’s good to be back.
You mix tracks that people know and love, but you also have a visually impressive set too (graphics etc). Is that the secret recipe to Dash Berlin's live gigs?
People enjoying the combination of the music and visuals are the key factor in the success of the Legends Of The Feel tour 2018.
Have you had some time to explore Ras al Khaimah too? If so, what have you been up to?
Coming fresh out of Las Vegas where I continue my 7th annual year DJ residency at Marquee, I decided it was a perfect moment to catch some sun rays and enjoy the warm hospitality of Bab Al Bahr.
The Cairo Statement
1: Commit to countering all types of terrorism and extremism in all their manifestations
2: Denounce violence and the rhetoric of hatred
3: Adhere to the full compliance with the Riyadh accord of 2014 and the subsequent meeting and executive procedures approved in 2014 by the GCC
4: Comply with all recommendations of the Summit between the US and Muslim countries held in May 2017 in Saudi Arabia.
5: Refrain from interfering in the internal affairs of countries and of supporting rogue entities.
6: Carry out the responsibility of all the countries with the international community to counter all manifestations of extremism and terrorism that threaten international peace and security
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