UBS to sell principal protection notes linked to Consumer Price Index

By Jennifer Chiou

New York, July 15 - UBS AG plans to price 100% principal protection notes due July 27, 2013 linked to the Consumer Price Index, according to a FWP filing with the Securities and Exchange Commission.

The interest rate is fixed at 3% for the first year. After that, it will equal the year-over-year change in the Consumer Price Index plus a spread of 2% to 2.5% per year. The exact spread will be set at pricing. In each monthly interest period, there is a floor of zero.

The payout at maturity will be par.

The notes are expected to price on July 22 and settle on July 27.

UBS Financial Services Inc. and UBS Investment Bank are the underwriters.

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