UBS $1 Billion AT1 Sale Rakes in Nearly $12 Billion of Orders

(Bloomberg) — UBS Group AG sold dollar-denominated Additional Tier 1 notes just a day after setting out plans to sell billions more of the risky securities in the coming years.

The Swiss lender priced $1 billion of securities callable in April 2031 to yield 7.75%, according to a person with knowledge of the sale, who asked not to be identified because the information is private. It follows UBS’s return to the market in November, when it pulled in $36 billion of orders for $3.5 billion of AT1s across two tranches — a deal that marked a recovery of the market in a tumultuous year.

Wednesday’s deal pulled in more than $11.7 billion of investor orders, according to a separate person familiar with the matter.

The new offer comes shortly after the bank outlined its plans to raise as much as $2 billion of the deeply subordinated debt this year and keep lifting a capital buffer by 2029 through the “gradual build of AT1.”

Read more: UBS Is Set to Sell Billions More AT1 Bonds in Coming Years

Other European banks are planning Additional Tier 1 issuance of similar sizes this year. BNP Paribas SA is planning to issue €2.5 billion ($2.7 billion) and Deutsche Bank plans €1 billion to €2 billion of AT1 and Tier 2.

Santander has planned €4 billion to €5 billion of hybrid issuance in 2024 having already raised €3.8 billion, including prefunding last year, according to various bank earnings and fixed income presentations seen by Bloomberg.

The market for new AT1s by European banks has been busy this week. Dutch lender ING Groep NV raised more than $1 billion, while Swedbank AB and Jyske Bank A/S sold new debt in dollars and euros, respectively, based on data compiled by Bloomberg.

AT1s — or contingent convertible bonds — were introduced after the financial crisis to ensure bondholders take losses first when a bank is in trouble while taxpayers are off the hook. They suffered the worst day of trading in their history in March after $17 billion of Credit Suisse notes were wiped out as part of the lender’s takeover by UBS.

The market has since recovered, with spreads on a multi-currency index by Bloomberg indicated near their lowest level since last February.

–With assistance from Ronan Martin and Olivia Raimonde.

(Updates with final pricing, book orders in second, third paragraph)

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