UBS Group (UBS) Stock: Drops as $6 Billion Tender Offer Targets Credit Suisse Notes

TLDR

• UBS stock drops as $6 billion tender offer targets legacy Credit Suisse notes
• UBS launches nine debt tenders as shares extend losses in pre-market trading
• UBS seeks to retire Credit Suisse notes through a tender plan worth $6 billion
• UBS sets September 10 deadline for nine tender offers on Credit Suisse notes
• UBS targets lower funding costs with a broad Credit Suisse debt tender program

UBS Group (UBS) shares fell 2.84% to $54.14 after the bank launched nine separate tender offers on legacy Credit Suisse notes. The stock then slipped another 0.15% to $54.07 in pre-market trading on September 2. The offers could total about $6 billion if holders tender all eligible notes and UBS accepts them.

UBS Group AG, UBS

UBS structured three offers on an any-and-all basis, covering sterling and dollar securities maturing between 2028 and 2033. The bank also opened six maximum-purchase offers covering additional dollar, euro, and sterling debt. A combined $2 billion purchase cap limits those six maximum-purchase offers.

UBS set September 10 as the expiration date, with tenders and withdrawals due by 5:00 p.m. Eastern time. The bank expects settlement on September 14, two business days after the scheduled expiration. Holders whose notes UBS accepts will also receive accrued and unpaid interest through the settlement date.

UBS Targets Legacy Credit Suisse Funding

Credit Suisse originally issued the notes before its 2023 merger with UBS Group. When the merger closed on June 12, 2023, UBS assumed Credit Suisse’s obligations under each affected note series. The current offers therefore address inherited liabilities within UBS’s broader funding structure.

UBS said the program supports proactive funding management and helps optimize interest expense across its capital structure. The bank also uses the process to manage total loss-absorbing capacity after absorbing Credit Suisse. UBS still plans to issue senior unsecured debt across major currency markets despite the tender program.

The any-and-all group includes a £750 million note, a $697.1 million note, and a $2.25 billion note. These securities carry maturities in 2033, 2028, and 2028, respectively, with separate reference benchmarks and fixed spreads. UBS will calculate each purchase price using the benchmark yield plus the applicable fixed spread.

Maximum Purchase Offers Cap Spending at $2 Billion

The six maximum-purchase offers cover outstanding principal amounts ranging from £450 million to $3 billion. UBS assigned acceptance priorities from one through six, which determine the order for purchasing tendered notes. The highest priority applies to 9.016% callable notes due 2033, while lower priorities cover other inherited debt.

UBS will not exceed $2 billion in total consideration for the maximum-purchase group, excluding accrued coupon payments. The bank may reject lower-priority series if earlier acceptances consume the available purchase capacity. However, UBS may accept higher or lower priority series depending on valid tenders and remaining capacity.

The tender offers carry no minimum principal requirement and do not depend on new financing. UBS may also modify, extend, or terminate individual offers without changing the others. The transaction gives UBS another tool to reduce funding costs while streamlining debt inherited from Credit Suisse.

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