UBS Group AG (SIX:UBSG) has initiated the sale of additional tier 1 (AT1) bonds, marking its first issuance after Credit Suisse's significant $17 billion debt writedown. The Swiss bank is offering two dollar-denominated perpetual tranches, callable in five and ten years, with initial price discussions hovering around 10% and 10.125% respectively. The deal, expected to conclude today, aims to bolster UBS's AT1 capital layer, a crucial buffer that enables banks to meet core capital requirements without solely relying on costlier equity.
In recent developments, UBS called a S$700 million bond and a sizable $2.5 billion note is approaching its initial early repayment dates in January. The AT1 notes feature an equity conversion mechanism that permits conversion into ordinary shares once the bank amends its articles of association to ensure sufficient conversion capital.
Laurent Frings, head of credit research at Aegon (NYSE:AEG) Asset Management, anticipates the offering to be significantly oversubscribed due to its competitive pricing and the built-in equity conversion mechanism.
InvestingPro Insights
UBS Group AG, a prominent player in the Capital Markets industry, has been witnessing some interesting financial shifts. According to real-time data from InvestingPro, the company's market capitalization stands at a substantial $79604.86 million. Additionally, the company's Price to Earnings (P/E) ratio is currently at 2.58, indicating a low earnings multiple.
InvestingPro Tips suggest that the management has been aggressively buying back shares, which often signals confidence in the company. Notably, UBS Group has also maintained dividend payments for 12 consecutive years, adding to its investment appeal. However, it's worth noting that the company's revenue has been declining at an accelerating rate, which could pose challenges ahead.
As an InvestingPro user, you can access a multitude of additional tips and real-time metrics to gain a more comprehensive understanding of the company's financial dynamics. For instance, there are 8 more InvestingPro Tips related to UBS Group AG available, providing a more in-depth analysis of the company's performance.
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