Additional Tier 1 bonds are a form of "bail-in" instrument designed to avoid taxpayers being shouldered with the responsibility of rescuing banks in financial trouble. When UBS rescued Credit Suisse almost three years ago, holders of such debt from Credit Suisse were wiped out – leading to legal action.

UBS reportedly sold $3 billion of Additional Tier 1 bonds on Monday – a form of loss-absorbing capital to deal with financial shocks.

The bonds attracted more than $21 billion of investor bids, Bloomberg reported, citing unnamed sources.

The sale of this form of hybrid debt instrument comes as UBS continues to resolve legacy legal issues stemming from the fate of Credit Suisse’s AT1 bonds, which were wiped out in the emergency takeover of Credit Suisse in 2023.

The lender sold a pair of $1.5 billion perpetual notes, the report said. The bonds, callable in 2031 and 2036, will respectively yield 6.625 per cent and 7 per cent, about a half-percentage point tighter than initial price talk.

The Swiss bank declined to comment to this news service when contacted about the matter today.

The report said this is the bank’s first AT1 transaction since September last year. understands that the latest AT1 trade is part of normal funding for 2026.

Switzerland’s Federal Administrative Court has revoked a 2023 order to write down about $17 billion of Credit Suisse AT1 notes as part of its March 2023 takeover by UBS. (See a report here.) The court has yet to decide whether the write-down itself will ultimately be reversed. The Swiss Financial Market Supervisory Authority (FINMA), the federal Swiss regulator, has said it will challenge the ruling.

In December, senior Swiss lawmakers recommended that UBS could use AT1 bonds instead of equity as capital backing for its foreign units. This would soften the impact of mooted new capital requirements, which prompted anger from UBS last year. CEO Sergio Ermotti has urged lawmakers to avoid imposing heavy burdens on UBS.

AT1 bonds were introduced as part of the regulatory capital framework after the 2008 financial crash. They’re designed to be a "bail-in" tool so that investors absorb losses instead of taxpayers, reducing systemic risk and the dangers of citizens shouldering the results of banks’ risk-taking.

UBS is due to issue full-year 2025 results and Q4 2025 figures on 4 February.