businessClosed Mar 20, 2023
UBS Shares Erase Losses After Falling as Much as 16%
- UBS to take over Credit Suisse with billions in central bank, state support
- Holders of risky bonds face $17 billion wipeout
- UBS erases early losses as investor weigh growth prospects
- Fed, global central banks move to boost dollar funding
- Bonds rally as investors turn to haven assets
Here are the key takeaways from our coverage of UBS’s historic, government-brokered takeover of Swiss rival Credit Suisse. Thank you for joining us:
- UBS is paying 3 billion francs for its rival in anall-share dealthat includes extensive government guarantees and liquidity provisions. The price per share marked a 99% decline from Credit Suisse’s peak in 2007
- Traders initially sold banks and broader stocks pretty hard, but markets ground higher as analysts and investors expressed relief at Credit Suisse being salvaged and said UBS might have gotten a bargain
- Among the biggest losers in the shotgun sale are investors in the firm’s riskiest bonds, known as AT1s, worth $17 billion, which are set to be wiped out. Regulators in the European Union rushed to reassure investors that shareholders should face losses before bondholders
- While Credit Suisse AT1s are trading near zero levels, senior bonds rallied after being spared in the rescue deal. UBS credit-default swaps climbed steadily
- Credit Suisse told staff that promised bonuses and pay increases will still be paid
