By Marisa Wong
Los Angeles, Feb. 9 – UBS AG, London Branch priced $25 million of 0% exchange-traded access securities (Etracs) 2x leveraged exchange-traded notes due Feb. 9, 2051 linked to the Dow Jones US Dividend 100 TR USD, according to a 424B2 filing with the Securities and Exchange Commission.
The company sold the 1 million Etracs 2x leveraged US Dividend Factor TR ETNs at par of $25 to underwriter UBS Securities LLC on Feb. 4.
After the initial trade date and from time to time, the company may sell a portion of those securities or issue additional securities at varying prices.
The securities are intended to provide 2 times leveraged long exposure to the compounded quarterly performance of the index.
However, the leverage may be reset more frequently if loss rebalancing events occur, and the securities will become unleveraged if a permanent deleveraging event occurs with respect to the index.
The payout at maturity will be the closing indicative value of the securities at the end of the final measurement period.
On the initial trade date, the closing indicative value was $25.00 per security. On any other calendar day prior to the final measurement period, the closing indicative value is (a) the current principal amount on the immediately preceding day times the index factor minus (b) accrued fees, which include an accrued tracking fee and an accrued financing fee.
The index factor represents the leveraged percentage change in the index relative to the index closing level at the last reset date.
The daily tracking fee is based on an annualized 0.95%. The daily financing fee is based on a financing rate of Libor plus 95 bps, subject to a 0% Libor floor.
The payout at maturity may be zero if the compounded leveraged quarterly return of the index is insufficient to offset the negative effect of the accrued fees or if the compounded leveraged quarterly return of the index is negative, the issuer noted.
The securities may be accelerated, and investors will not receive any payment, if their current indicative value on any day is less than or equal to zero.
The notes are putable, subject to a minimum of 50,000 notes and a redemption fee of 0.125%. They are callable in whole through and including the maturity date.
The securities will be listed on the NYSE Arca under the symbol “SCDL.”
The new Etracs are part of the issuer’s series B securities. Etracs issued prior to June 12, 2015 are series A debt securities. Unlike the series A ETNs, the series B ETNs do not benefit from the co-obligation of UBS Switzerland AG.
Issuer: | UBS AG, London Branch
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Issue: | Etracs 2x leveraged US Dividend Factor TR ETN
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Underlying index: | Dow Jones US Dividend 100 TR USD
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Amount: | $25 million
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Maturity: | Feb. 9, 2051
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Coupon: | 0%
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Face amount: | $25
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Payout at maturity: | Closing indicative value of the securities at the end of the final measurement period
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Closing indicative value: | On the initial trade date, $25.00 per security; on any other calendar day prior to the final measurement period, (a) the current principal amount on the immediately preceding day times the index factor minus (b) accrued fees, which include an accrued tracking fee and an accrued financing fee
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Index factor: | Leveraged percentage change in the index relative to the index closing level at the last reset date; leverage factor is 2 unless permanent deleveraging event occurs
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Fees: | Daily tracking fee is based on an annualized 0.95%; daily financing fee is based on a financing rate of Libor plus 95 bps, subject to a 0% Libor floor
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Call option: | In whole at any time
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Put option: | At any time, subject to minimum of 50,000 notes and 0.125% redemption fee
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Initial closing level: | 9,858.5840
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Pricing date: | Feb. 4
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Settlement date: | Feb. 9
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Underwriter: | UBS Securities LLC
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Listing: | NYSE Arca: SCDL
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Cusip: | 90278V206
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