UBS Group AG just took another big bite out of the Credit Suisse debt it assumed, launching a $7.9 billion buyback. By Bloomberg's tally, it is the largest of these legacy-debt repurchases to date.
On top of that, the bank plans to call three bonds soon, returning an additional $1.8 billion. Add it up and repayments approach $10 billion.
Even after these actions, UBS still carries about $29 billion of Credit Suisse legacy bonds, a decline from roughly $90 billion when the government-arranged rescue occurred in 2023. UBS said last week the move is part of proactive balance sheet management of its funding and regulatory loss absorbing debt, and a way to trim interest costs. A UBS representative declined to comment further.
UBS has been working to close the chapter on the emergency takeover that averted a broader banking crisis. It has cut thousands of roles, sold assets, and is now speeding the wind-down of inherited bonds that were already shrinking as past issues matured. In 2023, it repurchased another batch of these securities totaling $7.7 billion.
Investor appetite was so robust that UBS increased the cap on a set of notes in the ongoing tender two times - raising it initially to $4 billion from $2 billion, and later to $5.9 billion. "The rationale for UBS is clear.
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Not all Credit Suisse paper was treated equally. Senior bonds must be repaid in full, while the subordinated Additional Tier 1 notes were entirely written down and are now at the heart of investor lawsuits.
The other subplot here is regulatory. UBS and the Swiss government are still clashing about expensive post-crisis capital reforms.
Earlier this month, UBS notched an interim win when a parliamentary committee backed letting the bank meet up to 50% of new capital requirements with cheaper convertible debt instead of only equity. That would loosen the government's original call for 100% hard cash equity and could meaningfully reduce UBS's multi-billion dollar funding burden. Finance Minister Karin Keller-Sutter criticized the proposal as effectively a handout to corporations that would endanger taxpayers. The bill still needs approval from both chambers, and the next vote is scheduled during the chamber's autumn session running Sept. 14 to Oct. 2.
UBS also tapped markets earlier this week, issuing three senior bonds totaling $6 billion. And for the bond nerds keeping score, Bloomberg's chart on this topic tracks the outstanding legacy Credit Suisse senior bonds UBS took over, converted to U.S. dollars, and shows what amounts are left following the Sept. 2026 tender offer.
Cleaner liabilities usually mean lower interest costs, and fewer moving parts from the Credit Suisse rescue reduces uncertainty. The regulatory endgame matters too, because what counts as capital affects how much UBS has to raise and at what price. And if you hold bank debt, remember the pecking order: senior bonds have to be repaid in full, while AT1 holders can be left holding the bag in a crisis.
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