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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