By Marisa Wong
Los Angeles, March 24 – UBS AG, London Branch priced $750 million of additional 0% exchange-traded access securities – ProShares Daily 3x Long Crude exchange-traded notes due Jan. 4, 2047 linked to the Bloomberg WTI Crude Oil Subindex ER on March 19, according to a 424B2 filing with the Securities and Exchange Commission.
The issuer originally planned to sell up to $100 million principal amount of the notes in total and sold an initial $25 million of notes to underwriter UBS Securities LLC at par on Jan. 4, 2017.
On March 9, the issuer increased the issuance to $600 million by pricing $500 million of reopened notes.
The issuer may sell the reopened notes from time to time at varying prices.
However, UBS announced on March 24 that it has suspended further sales from inventory of the ETNs. The securities will be redeemed on April 9. The suspension remains in effect until the redemption date.
The Etracs are part of the issuer’s series B medium-term notes, which – unlike Etracs issued prior to June 14, 2015 – do not benefit from the co-obligation of UBS Switzerland AG.
The index is designed to measure the returns that are potentially available through an unleveraged investment in rolling West Texas Intermediate crude oil futures contracts. The index is a subindex of the excess return version of the Bloomberg Commodity index.
Payout
The payout at maturity will be a cash amount equal to the current principal amount as of the final valuation date.
On the pricing date, the current principal amount was $25 per note. On each subsequent calendar day, it equals (a) the current principal amount on the previous calendar day multiplied by the index factor (b) minus the annual tracking fee of 1.45% per year.
The index factor on any business day is equal to (a) 1 plus (b) the daily accrual on that business day plus (c) 3 times the index performance ratio.
The daily accrual is the rate of interest that could be earned on a notional capital reinvestment at the generic one-month U.S. Treasury Bill rate.
The index performance ratio on any business day is equal to (a) the index closing level on that business day divided by the index closing level on the immediately preceding business day minus (b) 1.
The notes are putable subject to a minimum of 50,000 notes. Holders who put their notes will receive the current principal amount minus a redemption fee of 0.125% of the current principal amount.
The notes are also callable at the current principal amount.
The notes will be subject to acceleration if the intraday indicative value of the notes falls to or below 30% of the current principal amount of the notes as of the end of the prior business day.
The notes are listed on NYSE Arca under the symbol “WTIU.”
| Issuer: | UBS AG, London Branch
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| Issue: | Etracs – ProShares Daily 3x Long Crude ETNs
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| Underlying index: | Bloomberg WTI Crude Oil Subindex ER
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| Amount: | $1.35 billion (increased from $600 million)
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| Maturity: | Jan. 4, 2047
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| Coupon: | 0%
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| Face amount: | $25
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| Payout at maturity: | Cash amount equal to current principal amount as of final valuation date
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| Current principal amount: $25 per note on pricing date; on each subsequent calendar day, (a) the current principal amount on the previous calendar day multiplied by the index factor (b) minus the annual tracking fee of 1.45% per year
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| Index factor: | (a) 1 plus (b) the daily accrual plus (c) 3 times the index performance ratio
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| Daily accrual: | Rate of interest that could be earned on a notional capital reinvestment at the generic one-month U.S. Treasury Bill rate
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| Index performance ratio: | (a) Index closing level on a business day divided by the index closing level on the immediately preceding business day minus (b) 1
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| Call option: | At current principal amount
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| Put option: | At current principal amount minus 0.125% redemption fee, subject to minimum of 50,000 notes
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| Acceleration option: | If intraday indicative value of the notes falls to or below 30% of the current principal amount of the notes as of the end of the prior business day
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| Initial pricing date: | Jan. 4, 2017
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| Settlement date: | Jan. 9, 2017 for $25 million
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| Reopening dates: | March 9 for $500 million, March 19 for $750 million
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| Agent: | UBS Securities LLC
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| Listing: | NYSE Arca: WTIU
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| Cusip: | 90274E117
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