Chicago, Dec. 24 – UBS AG, London Branch sold $50 million principal amount of series B ETracs Monthly Pay 2xLeveraged Wells Fargo MLP Ex-Energy exchange-traded notes due Oct. 21, 2049, according to a 424B3 filing with the Securities and Exchange Commission.
The notes priced at par of $25. The original issue of $25 million priced Oct. 24.
The ETNs provide two times leveraged long exposure to the compounded monthly performance of the Wells Fargo Master Limited Partnership ex Energy index, reduced by fees that consist of an accrued tracking fee based on an annual tracking rate of 0.85% per year and the accrued financing charges. The financing rate is Libor plus 80 basis points.
The index is intended to designed to measure the performance of all non-energy master limited partnerships listed on the New York Stock Exchange, NYSE MKT or Nasdaq with market capitalization of at least $100 million.
The notes will pay a monthly coupon equal to the sum of the cash distributions that a hypothetical holder of the index constituent securities would have been entitled to receive during the relevant period, if any.
The payout at maturity will be (a) the product of the current principal amount multiplied by the index factor plus (b) the final coupon amount minus (c) the accrued fees plus (d) the stub reference distribution amount, if any.
The current principal amount was $25 until Oct. 31. For each subsequent calendar month, it will be reset to equal the previous current principal amount multiplied by the index factor minus the accrued fees.
The current principal amount will be reset in the event of a loss rebalancing event, i.e., if the index decreases by more than 20% from the previous monthly initial closing level. A loss rebalancing event will have the effect of deleveraging the ETNs with the aim of resetting the then-current leverage to about two. This means that after a loss rebalancing event, a constant percentage increase in the index closing level will have less of a positive effect on the value of the ETNs relative to before the occurrence of the loss rebalancing event.
The index factor is (a) one plus (b) two times the index performance ratio.
The index performance ratio depends on the number of loss rebalancing events that have occurred in the applicable calendar month.
If no loss rebalancing events have occurred, the index performance ratio will be equal to the quotient of (a) the index valuation level minus the monthly initial closing level divided by (b) the monthly initial closing level.
If one or more loss rebalancing events have occurred, the index performance ratio will be equal to the quotient of (a) the index valuation level minus the most recent loss rebalancing closing level divided by (b) the most recent loss rebalancing closing level.
Beginning Oct. 30, the notes are putable until Oct. 14, 2049 subject to a minimum of 50,000 ETNs and a redemption fee of 0.125%. The notes are callable in whole but not in part beginning Nov. 12.
The ETNs have been approved for listing on NYSE Arca under the symbol “LMLB.”
UBS Investment Bank is the underwriter.
| Issuer: | UBS AG, London Branch
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| Issue: | ETracs Monthly Pay 2xLeveraged Wells Fargo MLP Ex-Energy ETNs, series B
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| Underlying index: | Wells Fargo Master Limited Partnership ex Energy index
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| Amount: | $50 million lifted from $25 million
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| Maturity: | Oct. 21, 2049
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| Coupon: | Sum of cash distributions that hypothetical holder of index constituent securities would have been entitled to receive during relevant period, if any; payable monthly
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| Price: | Par of $25
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| Payout at maturity: | (a) Product of current principal amount multiplied by index factor plus (b) final coupon amount minus (c) accrued fees plus (d) stub reference distribution amount, if any
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| Call option: | In whole but not in part beginning Nov. 12
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| Put option: | Putable from Oct. 30 until Oct. 14, 2049 subject to minimum of 50,000 ETNs and redemption fee of 0.125%
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| Initial closing level: | 3,537.6011
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| Pricing date: | Oct. 24
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| Settlement date: | Oct. 29
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| Amendment date: Nov. 6
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| Underwriter: | UBS Investment Bank
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| Listing: | NYSE Arca: LMLB
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| Cusip: | 90269A476
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