UBS buys back $3-billion bonds in bid to boost investor confidence

UBS Group said on Wednesday it would buy back 2.75 billion euros ($2.96 billion) worth of debt it sold just days ago, seeking to boost confidence among investors rattled by its $3-billion rescue of rival Credit Suisse at the weekend. 

UBS is buying the bonds at the price at which they were sold rather than at market prices, which compensates investors after the sell-off earlier this week.

The bonds in question are senior unsecured bail-in notes that were sold on March 9: a 1.5 billion-euro fixed-rate note due March 2028 and a 1.25 billion-euro fixed rate note due March 2032, UBS said. Since its government-backed rescue of Credit Suisse at the weekend, UBS has seen the value of its shares and bonds gyrate wildly. 

UBS shares fell by as much as 17 per cent after markets opened on Monday, only to close 35 per cent higher than those lows the following day.

The yield on its 7  additional tier dollar (AT1) bond jumped to a record 29.8 per cent at one point on Tuesday, from below 10 per cent just a week ago, according to Tradeweb data. On Wednesday it was at around 18 per cent. AT1s are a form of bail-in debt that sent shock waves through markets this week when Credit Suisse’s AT1s were written down to zero.

Set for talks with Michael Klein to terminate deal

UBS is set to enter talks with Michael Klein to terminate a deal that would have seen the Wall Street dealmaker take control of much of Credit Suisse’s investment bank, the Financial Times reported. Klein was merging his eponymous advisory boutique into Credit Suisse’s investment banking operations to create CS First Boston as a standalone business.

                                                                                                                                                         - Reuters