UBS sells subprime, Alt-A debts to Blackrock

UBS sells subprime, Alt-A debts to Blackrock 

 

ZURICH – SWISS banking giant UBS said on Wednesday it had completed the sale of 15 billion dollars (S$20.5 billion) of subprime and Alt-A US residential mortgage-backed securities to a fund managed by BlackRock.

‘Risk reduction remains a critical part of our ongoing financial restructuring and this sale is a big step towards further reducing our positions in this asset class,’ said Marcel Rohner, chief executive of UBS.

 

Mr Rohner had earlier confirmed the sale, but did not reveal details.

 

The positions with a nominal value of about 22 billion dollars were sold at a discount of 15 billion dollars to the newly created distressed asset fund.

 

UBS said that most of the positions are subprime and Alt-A – which is in between prime and subprime, and the remainder is prime.

 

The bank also said the fund purchased the securities using about 3.75 billion dollars in equity raised by BlackRock from investors and a multi-year collateralised term loan of about 11.25 billion dollars provided by UBS.

 

The transaction has closed, added the bank.

 

UBS, which has been forced to take massive writedowns due to the crisis, reported net loss for the first three months of the year of 11.54 billion Swiss francs.

 

It has written down over 37 billion dollars since the subprime crisis started. — AFP

 

Source: Straits Times