UBS has begun selling Additional Tier 1 (AT1) bonds, which were at the center of controversy during its emergency rescue of Credit Suisse. The Swiss banking giant is marketing two tranches of US dollar AT1 bonds with yields of around 10% and 10.125%. AT1 bonds are considered relatively risky and were introduced after the 2008 financial crisis to boost capital held by financial institutions. Fitch has assigned the new AT1 notes a "BBB" rating, four notches below UBS Group's overall viability rating of "A." The notes will contain a permanent write-down mechanism, which may be replaced by an equity conversion mechanism.
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