UBS offers first AT1 since Credit Suisse ruling, capital plans

[ZURICH] UBS Group is selling Additional Tier 1 debt for the first time since Swiss lawmakers floated changes that could expand its use to meet capital requirements, and as courts weigh the legality of the Credit Suisse AT1 writedown.

The lender is looking to sell two US dollar-denominated notes. The first tranche callable in 2031 is being marketed at around 7.125 per cent while the other which is callable in 2036 is being shown at around 7.5 per cent, according to a person familiar with the matter who asked not to be identified.

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 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

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’s 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. BLOOMBERG