[6-K] China SXT Pharmaceuticals, Inc. Current Report (Foreign Issuer)
UBS AG London Branch is offering $19.625 million of Contingent Income Auto-Callable Securities due 14 July 2028 linked to the common stock of Amazon.com, Inc. (AMZN).
Key commercial terms:
- Issue price: $1,000 per security; estimated initial value: $972.30 (97.23% of issue price).
- Contingent coupon: $26.25 per quarter (10.50% p.a.) paid only if AMZN’s closing price on a determination date is ≥ 70% of the initial price ($157.51).
- Initial price / Call threshold: $225.02 (100% of initial). If AMZN ≥ $225.02 on any quarterly determination date (except final), the notes are autocalled for $1,000 plus that period’s coupon.
- Downside threshold: 70% of initial price ($157.51). If at final valuation AMZN ≥ $157.51, holders receive $1,000 plus final coupon; otherwise UBS pays a cash value equal to (1,000 / 225.02) × final price, exposing investors to full downside below the 30% buffer.
- Term: up to 3 years (16 Jul 2025 – 14 Jul 2028), subject to early redemption.
- Fees: total underwriting/structuring 2.25% ($22.50 per $1,000); net proceeds 97.75%.
- Credit: senior unsecured obligations of UBS AG; payments depend on UBS’s solvency.
Risk highlights disclosed:
- No principal protection; investors could lose up to 100% if AMZN falls >30% at maturity and no autocalled.
- Coupons are contingent and non-cumulative; no payment if AMZN < 70% threshold on any observation.
- Early-call risk: investment horizon may be shortened to as little as ~3 months, limiting total return.
- Liquidity expected to be limited; notes will not be listed.
- Potential conflicts of interest and secondary-market pricing differentials noted; UBS’s valuation may be lower than secondary quotes immediately after issuance.
- Complex U.S. tax treatment; UBS and investors agree to treat notes as prepaid derivatives with ordinary-income coupons.
The filing contains extensive hypothetical examples, historical AMZN price data, detailed risk factors, distribution arrangements and FATCA/Section 871(m) tax discussions. All payments are subject to market performance of AMZN and the credit risk of UBS AG.
- None.
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Insights
TL;DR High 10.5% coupon and 30% buffer attractive, but principal is at risk, coupons are contingent, and liquidity/credit concerns remain.
Return profile. Investors receive rich quarterly income only when AMZN stays above 70% of the July 11 2025 reference price. A 30 % buffer is typical for three-year retail notes, but equity volatility means coupons could lapse for long periods, materially lowering effective yield.
Early-call dynamic. If AMZN merely holds flat or appreciates, the note autocalled, capping upside at one coupon. The 100 % call barrier makes early redemption likely in bullish or even sideways markets, shortening duration and forcing reinvestment risk.
Downside. Failure of autocalled and a >30 % drop in AMZN forces a linear loss; e.g., a 50 % fall delivers ≈ $444 per $1,000. Investors carry equity-like downside with debt-like upside.
Valuation. The 2.25 % placement fee and internal funding spread explain the 97.23 % estimated fair value, implying an immediate ~2.8 % mark-to-model haircut. Secondary bids may be below this once the six-week market-making premium amortises.
Credit/liquidity. All cash flows rely on UBS, a Swiss G-SIB; while investment-grade, holders face bail-in risk under Swiss resolution law. No listing and discretionary market-making may widen bid-ask spreads, especially if AMZN becomes volatile.
Verdict. Suitable for income-seeking investors comfortable with issuer credit exposure and potential full capital loss, who believe AMZN will not fall more than 30% over three years.