Swiss giant UBS has issued $2 billion of subordinated loss-absorbing non-dilutive notes. 

The notes were offered in minimum denominations of $200,000 and were widely placed with private and institutional investors in Asia and Europe.

The notes, which will qualify as tier 2 capital under Basel III standards and have a maturity of 10 years with an optional call at year 5, will pay a non-deferrable coupon of 7.25 per cent. The loss absorption trigger is set at a 5 per cent common equity ratio, with the ratio calculated under the prevailing regulatory regime, being Basel 2.5 until year end 2012, and "phased-in" Basel III thereafter until those new rules become fully applicable on 1 January, 2019.

"Today's capital issuance represents an important step in our compliance with Basel III/ FINMA capital requirements and is a further proof point that we are delivering on our capital plans. The very competitive coupon of 7.25 per cent for this 10-year benchmark-size offering reflects UBS's strong capital, liquidity and funding position. Today's deal marks the beginning of an issuance program as we build our loss-absorbing capital base to meet FINMA [the Swiss financial regulator] and the Basel Committee requirements for systemically important banks well in advance of the regulatory deadlines," group chief financial officer Tom Naratil said in a statement.