UBS Draws Big Orders for Euro Bonds After Bumper Earnings

(Bloomberg) — UBS Group AG drew strong demand for a euro debt sale, days after raising dollar debt following better-than-expected quarterly earnings.

The Swiss lender pulled in combined orders for more than six times its €2 billion ($2.3 billion) sale of HoldCo debt due in six and 11 years, according to a person with knowledge of the sale, who asked not to be identified as the information is private. Both notes can be called a year earlier than maturity.

Today’s deal follows its $2 billion offering of perpetual callable notes in the US market last week, split across two tranches. That sale also proved popular with investors, who placed orders of more than $16 billion across the two portions, according to data compiled by Bloomberg.

The offerings come as the bank continues to manage its capital structure following its acquisition of Credit Suisse and as it posted second-quarter net income that beat average estimates, sending its shares to the highest since March, data compiled by Bloomberg show. The lender also signaled that future earnings should be supported by the prospect of cooling global trade tensions.

It drew more than €5.2 billion of orders for a €750 million six-year tranche, which will price at 87 basis points above midswaps and well inside initial price talk of about 120 basis points. Its €1.25 billion 11-year tranche attracted orders exceeding €7.3 billion, again allowing UBS to considerably cut the spread on offer to 115 basis points above swaps from an opening range of about 150 basis points.

The debt will be counted as part of UBS’s total loss-absorbing capacity, or TLAC, helping it to meet regulatory capital requirements. UBS Investment Bank, Commerzbank AG, Danske Bank A/S, DZ Bank and Swedbank AB are serving as bookrunners for the transaction, which is expected to price later on Tuesday.

Two other borrowers are also offering debt today. Wendel SE is set to price €500 million of eight-year notes, while DNB Bank ASA boosted the size of a floating-rate notes sale to €650 million from an initial €500 million, in what was its first public debt deal since May, data compiled by Bloomberg show.

Issuer Profile

Debt distribution: UBSG SW Equity DDIS

Capital structure: UBSG SW Equity CAST

Related securities: UBSG SW Equity RELS

Ratings history: UBSG SW Equity CRPR

This story was produced with the assistance of Bloomberg Automation

(Updates with final deal terms and order book details)

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