UBS Downgraded over Credit Suisse Deal
UBS ratings have been downgraded following the acquisition of its troubled immediate rival in the market. Last week, it announced an offer to save Credit Suisse from going under amidst the US Banking crisis that has spooked the financial market.
In the last few days, UBS is among the most mentioned companies across news items, according to Factiva data, after rating agencies downgraded the bank following its acquisition.
UBS agreed to buy Credit Suisse after increasing its offer to more than $2 billion, with Swiss authorities poised to change the country’s laws to bypass a shareholder vote as they rush to announce a deal before Monday.
The all-share deal between Switzerland’s two biggest banks is set to be announced as soon as Sunday evening and will be priced at a fraction of Credit Suisse’s closing price on Friday, all but wiping out the target’s shareholders, three people with direct knowledge of the situation said.
UBS will now pay more than SFr0.50 a share in its own stock, up from a bid of SFr0.25 earlier today worth around $1bn that was rejected by the Credit Suisse board, the people said. But the price remains far below Credit Suisse’s closing price of SFr1.86 on Friday.
Reacting to the deal, Moody’s revised the outlook on UBS’s long-term deposit ratings and senior unsecured ratings to negative from stable, and S&P Global Ratings also cut its outlook to negative.
The Moody’s rating change was motivated by concern that Credit Suisse’s weaker credit profile and the cost of integration following the takeover would make it more difficult for UBS to hit financial targets, while S&P Global Ratings cited similar reasons for its downgrade.
UBS shares rose in early trading on Tuesday following a steep fall after the acquisition was first outlined. # UBS Downgraded over Credit Suisse Deal CBN Devalues Naira 12.95% despite Rising Foreign Reserves
