On March 22, 2016, UBS Group Funding (Jersey) Limited established its USD 30 billion Senior Debt Programme ("Programme"), fully and unconditionally guaranteed by UBS Group AG ("UBSG"). The Programme is a global programme allowing for the issuance of notes both on a Rule 144A/RegS basis and on a RegS only basis.
Furthermore, on April 5, 2016 UBS executed its debut issue of 5 billion "Bail-inable Bonds" under the Programme. The USD 1 billion Floating Rate Senior Notes due 2021, the USD 2 billion 3.00 per cent. Senior Notes due April 2021 and the USD 2 billion 4.125 per cent. Senior Notes due April 2026 (together, the "Notes") have been issued on a Rule 144A/RegS basis and will be listed on the SIX Swiss Exchange Ltd.
The Notes are designed to meet the criteria for so-called Total Loss Absorbency Capacity (TLAC) instruments proposed by the Financial Stability Board (FSB) and to allow the absorption of losses by the noteholders through a statutory full or partial conversion and|or write-down ordered by the Swiss Financial Market Supervisory Authority FINMA ("FINMA") in the course of restructuring proceedings with respect to UBSG. As senior unsecured instruments, the Notes can only be fully or partially converted into equity of UBSG or written-down under Swiss law after the shares of UBSG have been written-off and the subordinated debt of UBSG has been written down. The structure and mechanics of the Notes permit that the instruments be fully or partially converted or written-down by FINMA prior to creditors of operating liabilities of the bank UBS AG. Inter alia, the Notes contain contractual mechanics to (1) bring the Notes into the jurisdiction of the resolution powers of FINMA to – based on the Swiss banking act – write-down the Notes or convert the Notes into equity of UBSG in whole or in part in the course of restructuring proceedings with respect to UBSG (automatic issuer substitution), (2) safeguard the recognition of the exercise of such a resolution power by FINMA, and (3) provide for the possibility of the exchange of the Notes for newly issued notes if, after the completion of the Swiss restructuring proceedings with respect to UBSG, the Notes have not been fully written-down and|or converted into equity of UBSG and certain additional conditions are fulfilled.
Homburger advised UBS in the structuring of the transaction and on all regulatory and transactional aspects as to Swiss law of the offer, the issuance and listing of the Notes.
The Homburger team included partners Benedikt Maurenbrecher, Stefan Kramer (both Financial Services) and Stefan Oesterhelt (Tax) as well as counsels Lee Saladino and Eduard De Zordi, associate Daniel Hulmann and paralegal Bettina Oertle (all Financial Services).
