Credit derivatives house of the year: UBS

Risk Asia Awards 2025

Christine Wang, UBS

UBS says its integration with Credit Suisse is now in the past, and the Swiss bank can focus on growing the business. When it comes to Asia-Pacific credit, this has translated into an expanded client footprint, new product development and significant growth in trading volumes.

“UBS has experienced uniquely strong growth,” says Satoshi Amatani, head of credit solution trading Apac, global markets, UBS. “Several new clients have started trading credit products with us for the first time. We have also enhanced our product capabilities and introduced innovative new structures, enabling us to win new trades that we wouldn’t have been able to capture otherwise. We are very pleased with our success over the past 12 months.”

Feedback from clients has been very positive, too.

“I’ve been in the industry for a long time, and many dealers offer fairly similar products to the market,” says one senior executive from a Taiwanese securities firm. “What I appreciate from UBS is that they regularly undertake financial innovation and product innovation. They are very creative.”

Another client from a Chinese securities house observes that, since the merger with Credit Suisse, UBS has been bringing more interesting trading ideas to the table. They also appear willing to shoulder a greater share of the risk, says the client.

Japan

Since taking over Credit Suisse in 2023, a core focus of UBS’s credit team has been Japan. This is an area Credit Suisse was historically strong in and, indeed, when UBS took over its Swiss competitor, $2 billion worth of credit trades in special-purpose vehicles had to be migrated over to the new entity.

This year, UBS has overhauled its trading capabilities in the country and revamped its distribution model.

Satoshi Amatani, UBS

“We now have the full structured credit structuring team as well as structured credit traders based in Japan. This makes a substantial difference to the products we can offer. This business requires warehousing the risk, managing that risk, holding the right positions and being able to anticipate client flow. These tasks cannot be effectively managed from outside the country,” says Amatani. 

UBS has also expanded its sales team in the country, setting up a dedicated team of six people to target the more than 200 regional banks that are scattered around the country. UBS uses the term ‘regional bank’ in a fairly broad sense, encompassing both those larger institutions that are affiliated with the Regional Banks Association of Japan as well as smaller community banks. UBS says that since expanding its sales team, it has managed to onboard nearly 100 regional banks around the country.

“As you can see, we are firing on all cylinders to make Japan a success – from resource investments, as well as sales and client coverage standpoints,” says Christine Wang, head of execution sales Apac, global markets, UBS. “If you step back and take a look at the macro picture in Japan, structured credit has become a very important part of investment books, especially for regional banks.”

Having endured a seemingly unshakeable deflationary environment for the better part of three decades, Japan’s financial institutions are now facing a situation in which both inflation and interest rates are going up. This means institutional investors are having to seek higher returns, since their portfolio is no longer being benchmarked against negative bond yields.

“Structured credit is the natural fit. By marrying our structuring capabilities with our trading expertise, we can identify market dislocations, find the right credits for Japanese clients, and warehouse much of the risk. This has allowed us to meet the demand for a higher return threshold driven by higher funding costs,” says Wang.

Diversification is also very important, and Japanese clients don’t generally want to be left holding all Japanese names. This has afforded UBS a further opportunity to shine, extending a range of repacks to clients with varying levels of sophistication.

“Being a truly global franchise allows us to deliver the best outcomes for our clients and to structure overlays that optimally suit our client needs,” says Wang. “Our global teams can understand the risk appetite of our Japanese clients, identify the credits they are comfortable with, and source appropriate risk from different parts of the world, according to the yield targets our clients are looking for.”

UBS’s approach to Japan has certainly paid off, with the Swiss bank seeing a 260% year-on-year increase in repacks traded in the market in 2025.

Taiwan

UBS has also been forging new paths in Taiwan, launching a new securitisation product for retail investors in the market.

Prior to UBS’s takeover, Credit Suisse had already built up a strong retail following principally selling medium-term notes and cash bonds to investors. With interest rates falling, UBS’s credit team spotted fresh opportunities in the market.

Taiwanese savers often rely on life insurance policies for generating a steady income in the future, buying unit-linked products while they are saving and drawing down on this investment when they hit retirement age.

However, as interest rates have fallen, such policies have become less attractive. Wang says that this has led to many savers giving them up and putting their money elsewhere. However, fixed-income opportunities on the Taiwanese market remain limited.

“A lot of retail investors are looking for regular income on names they are familiar with,” says Amatani. “However, many issuers are not willing to issue monthly coupon payments on callable bonds to retail investors. This is just not a significant client base for them.”

Securitisation is a popular way of wrapping credit instruments into fixed-income callable notes. It has become particularly popular within the private banking world. It is less widely used among retail investors – and for good reason.

For one thing, the trades are fairly small. Retail clients are unlikely to execute $5 million or $10 million trades, as they might if they were high-net-worth investors. This leaves UBS holding the callable notes on its balance sheet, feeding them slowly into the market as demand picks up. UBS has to work closely with local distributors to get the notes on to the market.

Another significant challenge was to get regulators comfortable with the new offering. This involved making sure the right legal opinions were in place, obtaining the necessary ratings and, crucially, finding local distribution partners who were willing to execute the first trades on the market.

“It’s exciting to have opened up a new market that didn’t exist before. We have given our distributor clients in Taiwan a whole new product to be excited about. No other bank is doing this – they are simply selling their own funded notes,” says Amatani.

The first securitised callable bond that UBS launched for retail investors in Taiwan was linked to Taiwan Semiconductor Manufacturing Company, with a coupon of 4.65%. This was shortly followed by a callable bond on the Kingdom of Saudi Arabia debt, with a coupon of 5.65% maturing 2046. UBS is currently exploring what other fixed instruments it should securitise for Taiwan’s retail market.

Wealth management

No assessment of UBS’ credit offering would be complete without looking at how new trading ideas are helping to support the bank’s expansive wealth management franchise.

This year, the focus has been on rolling out repack credit-linked notes (CLN), which have been particularly popular in Europe and Japan, to other Apac countries that haven’t seen these products so much in the past.

These repack structures involve taking the issuer risk of a particular name that a client wants exposure to and then giving the funding to other issuers by buying their secondary bonds.

Once the repack has been structured in this way, UBS also has the option of overlaying a credit default swap (CDS) on to the product, to manufacture new investments that don’t exist anywhere else in the market.

For instance, by overlaying the China sovereign CDS on to a funding asset created from the benchmark bonds of a UK bank – and pairing this with the financing from UBS’s private bank – UBS was able to offer close to double-digit returns for one particular client.

Wang says the rate of return from the repack CLN consistently beats the Lombard rate that clients could obtain through short-term secured lending.

“What works really well for us is that we have UBS Wealth Management as an internal client, and we are constantly collaborating with them on generating new trade ideas,” she says. “We need to find solutions that are scalable and likely to appeal to the mass market. Our credit repack products, for instance, tick all the right boxes for our sophisticated clients.”