Swiss Franc Bond House: UBS

IFR Awards 2022
4 min read
Jonathan Penner

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Even the Swiss bond market had a tumultuous 2022. But against that background, one bank stood out, finally emerging from the shadows of its rivals. Demonstrating expertise, market knowledge, and highlighting its dominance as leader across the board at a time of unprecedented uncertainty, UBS is IFR's Swiss Franc Bond House of the Year.

Swiss Franc Bond House

It’s taken a long time – 25 years to be precise – but in 2022 UBS finally reclaimed the top spot in the Swiss franc bond market after dominating almost every sector.

Credit Suisse had been the leading bank in the Swiss franc bond league tables every year since 1997, according to Refinitiv data. But no more.

Even competitors were impressed. “It is crystal clear to me that UBS should become the house of the year," said one market participant at a rival institution.

UBS led from the start of the year and held onto its pole position, keeping its momentum going and even widening the gap as 2022 closed.

The bank ended the year with a 27.1% market share, almost a percentage point more than Credit Suisse. Underpinning its success was its dominance in all relevant sub-sectors – SSA, corporates, financials (covereds, senior and subordinated), emerging markets and ESG. The bank was also instrumental in the only digital bond in the Swiss market in 2022, as issuer and sole lead.

UBS helped bring almost every major deal of the year, including Holcim’s and Axpo's sustainability-linked bonds, Roche's SFr3bn four-tranche and SFr800m dual-tranche offerings, and Nestle's SFr1.5bn and SFr930m triple-tranche deals.

It also led the way for non-domestic issuers, such as Nationwide Building Society, CBA, Westpac, KHFC and HSBC, some of whom were making their debuts or returning to the market after an extended absence. UBS was the lead underwriter for international issuers with a market share of 41%.

Last year, the Swiss National Bank hiked rates for the first time since 2007 and the resultant positive yields allowed for shorter durations to be issued, with the average maturity falling by 1.7 years compared with 2021. UBS capitalised on that, leading short-dated offerings from Roche, including a SFr1.25bn nine-month note as part of its SFr3bn four-tranche deal in February, as well as KNOC's two-year bond and KHFC's three-year covered bond.

Of the 147 tranches of deals that UBS was a lead on in 2022, 64 had tenors of five years or less, for a volume of SFr14.8bn. Those bonds accounted for nearly half of the SFr33.7bn of supply in which UBS was involved.

The bank was also at the forefront of the ESG push in the franc market, further increasing its market share in the sector and supporting various issuers on their inaugural ESG bond offerings. Those included Holcim, Axpo, Kantonsspital Aarau, Romande Energie, Clariant, Baloise and the Swiss government.

“Sustainable finance was a key sector for us,” said Manuel Gadient, head of DCM and syndicate for Switzerland. “Domestic ESG caught up with the international sector, and our thought leadership paid off. Novel products can easily sell if well prepared in the Swiss market.”

And talking of novel products, UBS more or less capped the year with its milestone digital transaction, supporting the possible transformation of the bond markets to a fully digital market infrastructure.

It issued the first digital bond traded and settled at a regulated exchange by a banking institution globally, with its SFr375m three-year deal in early November. It was only the second such bond to be brought to the Swiss market after SIX's proof of concept deal the year before.

Still, while the digital bond was something different, in a tough environment it was execution on the bread-and-butter stuff that defined whether 2022 was a good year or not for bond desks.

“Not all deals have to be ESG or headline grabbing debuts,” said Andreas Tocchio, head of Swiss franc debt syndicate. “Frequently, it’s a question of timing for the right deal. A badly timed trade can cost a fortune, both in P&L and in reputation. With half of the market having never seen a rate rise, and some of the younger participants even asking if we had emergency plans to deal with positive yields, experience counted.”

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