UBS Sells Structured Notes Tied to Czech Republic, ArcelorMittal
UBS sold a 95 million-koruna ($5 million) credit-linked note linked to a euro-denominated bond from the central European government maturing in June 2014, according to data compiled by Bloomberg.
Investors in the note, which will mature in July 2016 or earlier if the government defaults, will receive a coupon equal to 1.9 times the three-month Prague interbank offered rate, or Pribor (PRIB03M), to a maximum level of 5 percent.
Pribor was fixed at 1.24 percent yesterday. At that level, investors would receive a payment of 2.4 percent in a year’s time, compared with a current yield on the underlying government note of 1.44 percent, according to Bloomberg Bond Trader prices.
UBS also issued a 60.6 million-koruna security due July 2017 tied to a June 2018 dollar bond from Luxembourg-based ArcelorMittal (MT), the world’s biggest steelmaker.
Investors in the ArcelorMittal-linked structured note receive a fixed coupon of 3.7 percent in the first two years, switching to three-month Pribor plus 4 percent from year three.
The notes are only the third and fourth structured securities to be priced in the koruna this year, Bloomberg data show. The two other notes in the currency were also sold by UBS in January and were linked to the bonds of Austria and Glencore International AG.
Credit-linked notes are debt securities issued and underwritten by banks linked to the bonds or credit-default swaps of a separate entity, with investors exposed to losses if either the bank that sold the note or the entity that the note is tied to defaults.
Stephanie Aneto, a spokeswoman for UBS in London, declined to comment.
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