By Angela McDaniels
Tacoma, Wash., Oct. 1 – UBS AG, London Branch sold $25 million principal amount of monthly pay 2x leveraged exchange-traded access securities due Sept. 30, 2044 linked to the Solactive US High Dividend Low Volatility index, according to a 424B2 filing with the Securities and Exchange Commission.
The company sold the notes at par of $25 to underwriter UBS Securities LLC.
UBS plans to issue up to $100 million of the notes. The remainder will be sold from time to time at varying prices.
The notes pay a variable monthly coupon linked to two times the cash distributions, if any, made on the index constituents. If the index constituents do not make distributions, then investors will not receive any coupons.
The notes are putable, subject to a minimum of 50,000 notes and a redemption fee of 0.125%. They are callable in whole beginning Oct. 5, 2015.
The notes began trading on the NYSE Arca under the symbol “HDLV” on Wednesday.
Index
The notes a provide monthly compounded two times leveraged long exposure to the price return version of the Solactive US High Dividend Low Volatility index. The index is designed to measure the performance of 40 dividend yielding, relatively lower volatility index constituent securities from the universe of the largest 1,000 U.S. listed stocks by market capitalization.
Two times the index yield as of Sept. 24 was 10.02%.
The top 10 constituents of the index as of Sept. 18 were Verizon Communications Inc. (9.95% weight), AT&T Inc. (9.9% weight), Philip Morris International (9.58% weight), Altria Group Inc. (7.36% weight), Southern Co. (4.86% weight), Kinder Morgan Inc. (4.85% weight), Duke Energy Corp. (4.81% weight), CenturyLink Inc. (4.27% weight), PPL Corp. (3.91% weight) and Health Care REIT Inc. (3.32% weight).
Payout
The payout at maturity will be the current principal amount plus 200% of the index return, which could be positive or negative, plus the final coupon amount minus the accrued fees, which are a tracking fee of 0.85% per year and a financing charge of Libor plus 60 basis points.
The current principal amount is $25 until the first monthly valuation date. For each subsequent calendar month, the current principal amount is reset to the previous current principal amount plus two times the index return on the monthly valuation date minus accrued fees on the monthly valuation date.
When calculating the index return, the final level will be the average of the index's closing levels on the 10 business days ending on the final valuation date, and the initial level will be its closing level on the most recent monthly valuation date.
For each month, the monthly valuation date is the last business day of the previous calendar month.
| Issuer: | UBS AG, London Branch
|
| Issue: | Monthly pay 2x leveraged exchange-traded access securities
|
| Underlying index: | Solactive US High Dividend Low Volatility index
|
| Amount: | Up to $100 million
|
| Maturity: | Sept. 30, 2044
|
| Coupon: | Payable monthly in amount linked to 200% of cash distributions, if any, made on index constituent securities
|
| Face amount: | $25
|
| Payout at maturity: | Current principal amount plus 200% of index return plus final coupon amount minus accrued fees tracking fee of 0.85% per year and accrued financing charge of Libor plus 60 bps
|
| Call option: | In whole beginning Oct. 5, 2015
|
| Put option: | At any time, subject to minimum of 50,000 notes and 0.125% redemption fee
|
| Initial index level: | 196.81
|
| Pricing date: | Sept. 30
|
| Settlement date: | Oct. 3 (for $25 million)
|
| Underwriter: | UBS Securities LLC
|
| Fees: | None
|
| Listing: | NYSE Arca: HDLV
|
| Cusip: | 90270L727
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