UBS brings greenshoes to CoCos

摘要

The use of a "greenshoe" option on an Additional Tier 1 deal from ubs could set a new template for raising risky debt capital, helping dealers to stabilise new issues. The Swiss lender's investment bank included a greenshoe option - a rarity in fixed-income markets - as a risk-free technique to run a larger than usual short on the new issue, and avoid the type of volatility that has frequently beset ATI deals over the past year. "One of the issues for the ATI market has been lead managers' inability to stabilise the secondary market due to the 5% limit on short positions," said Barry Donlon, head of capital solutions at UBS. This riskiest form of bank debt has grown rapidly since 2013, with US$131bn issued globally by the end of last year, according to Fitch. But wary of being left with inventory if markets turn sour, dealers have struggled to support new issues, leaving some bonds to trade down after syndication.