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UBS launches USD2 billion Basel III-compliant loss-absorbing notes

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UBS is issuing USD 2 billion of subordinated loss-absorbing non-dilutive notes. The notes, which will qualify as tier 2 capital under Basel III standards and have a maturity of 10 years with an optional call at year five, will pay a non-deferrable coupon of 7.25%.

The loss absorption trigger is set at a 5% common equity ratio, with the ratio calculated under the prevailing regulatory regime, being Basel 2.5 until year end 2012, and "phased-in" Basel III thereafter until those new rules become fully applicable on 1 January, 2019.

The notes were offered in minimum denominations of USD 200,000 and were widely placed with private and institutional investors in Asia and Europe.

Group Chief Financial Officer Tom Naratil (pictured), says: "Today’s capital issuance represents an important step in our compliance with Basel III/ FINMA capital requirements and is a further proof point that we are delivering on our capital plans. The very competitive coupon of 7.25% for this 10-year benchmark-size offering reflects UBS’s strong capital, liquidity and funding position. Today’s deal marks the beginning of an issuance program as we build our loss-absorbing capital base to meet FINMA and the Basel Committee requirements for systemically important banks well in advance of the regulatory deadlines."

 

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