(Zurich) Swiss banking giant UBS announced on Wednesday the purchase of bailout bonds issued just before the takeover of rival Credit Suisse.
On Friday, UBS, the number one in the Swiss banking sector, had issued so-called bail-in bonds. These bonds are part of the financial instruments to raise the sums that the banks must set aside in order to be able to be stabilized in the event of a crisis.
This issue coincided with another sharp drop in its competitor’s shares, which prompted the Swiss authorities to open negotiations in an emergency to ask UBS to buy Credit Suisse to avoid its sinking.
UBS will redeem these bonds issued less than a week ago, on March 17, for a total amount of 2.75 billion euros after a “cautious assessment” in “light” of the announcement made two days earlier. late regarding the takeover of Credit Suisse, the banking giant said in a statement.
On Sunday evening, UBS agreed to pay 3 billion Swiss francs (an equivalent sum in euros) to buy Credit Suisse after two days of negotiations with the Ministry of Finance, the central bank and Finma, the Swiss financial supervisory authority. markets and the banking sector.
Among the measures intended to facilitate this takeover, the Swiss authorities surprised by deciding to depreciate Credit Suisse bonds called AT1, reducing their value from 16 billion francs to zero, which triggered shocks on the bond markets.
In the press release, UBS announces the launch on Wednesday of an offer which runs until March 28 for the early expiry date and until April 4 for the final expiry date in order to redeem these bonds.
ING analysts see it as a way for UBS to “assure investors” that it will maintain a market-friendly line on bonds, on the one hand because the union with Credit Suisse will “massively change the profile UBS credit rating,” they argue in a stock commentary.
On the other hand, the Swiss authorities’ decision on Credit Suisse’s AT1 bonds “risks making investors suspicious”, “even if it has partially saved shareholders”, they add.
They see it as a reason for UBS to “make amends” to try to reassure investors.
ING analysts also note that “since their launch, these bonds have substantially underperformed, in particular since the announcement of the forced merger with Credit Suisse”.