UBS prepares new move on capital rules
UBS might struggle to attract big institutional investors for more loss-absorbing bonds it wants to sell, after investors voiced distaste for the structure and price of an initial $2bn (£1.3bn) deal announced yesterday.
UBS’s new bonds are designed to help bolster the bank in tough times by absorbing losses. Their value can be written down if the bank’s key common equity Tier 1 ratio falls below five per cent or hits non-viability.
The bank, which needs to raise roughly $16bn to meet new capital rules, said it is weighing issues in other regions and currencies which are likely to exceed $1bn in size.
UBS attracted $5.5bn of demand from investors. But they also drew sharp criticism from several potential institutional buyers, who said similar issues from UBS and other banks will be a tough sell.
“It’s clearly not an investor-friendly structure,” said Philippe Kellerhals from asset management firm Cairn.