High-Yield UBS Auto-Callable on Meta Stock: 60% Barrier, 2028 Maturity
Rhea-AI Filing Summary
UBS AG London Branch plans to issue Contingent Income Auto-Callable Securities maturing on or about 30 June 2028 that are linked to the common stock of Meta Platforms, Inc. (META). Each security has a $1,000 stated principal amount and is expected to price on 27 June 2025 and settle on 2 July 2025. Holders may receive quarterly contingent coupons of $27.00 (10.80% p.a.) provided META’s closing price on the relevant observation date is at or above the 60% downside threshold. If on any quarterly determination date (other than the final one) META closes at or above the 100% call threshold, the notes are automatically redeemed at par plus the coupon.
At maturity, investors receive: (i) par plus the final coupon if META is at or above the downside threshold; or (ii) a cash value equal to META’s final price multiplied by the exchange ratio if the downside threshold is breached, exposing investors to losses of up to 100% of principal. The securities do not participate in any upside above par, are unsecured, unsubordinated obligations of UBS and will not be listed on any exchange. Estimated initial value is expected between $934.70 and $964.70, reflecting embedded fees (2.25% selling concession) and dealer margins.
The preliminary prospectus highlights multiple risks: credit exposure to UBS, limited or no secondary market, potential early redemption, price volatility of a single equity, and uncertain U.S. tax treatment. Investors should review the complete risk factors in the preliminary pricing supplement before purchasing.
Positive
- 10.80% annualized contingent coupon provides above-market income potential as long as META stays at or above the 60% threshold on observation dates.
- Quarterly auto-call feature can return capital early at par plus coupon if META closes at or above its initial price, shortening duration risk.
Negative
- Principal is at full risk below the 60% downside threshold; investors could lose their entire investment if META falls 40% or more by maturity.
- No participation in upside; maximum return is limited to coupons, even if META appreciates significantly.
- Credit exposure to UBS AG, including Swiss bail-in risk, could impair payments regardless of META performance.
- Unlisted structure and 2.25% sales concession create potentially wide bid-ask spreads and limited secondary market liquidity.
- Estimated initial value up to 6.5% below issue price indicates an immediate mark-to-market drag for investors.
Insights
TL;DR 10.8% quarterly-pay note offers yield but caps upside and risks full loss below 60% META level plus UBS credit exposure.
The product targets income-hungry investors willing to trade equity upside for an above-market coupon. A 10.8% annualized contingent rate is competitive, yet the 100% call threshold means notes could be redeemed quickly if META rallies, truncating returns. Protection only extends to a 40% drawdown; below that, losses mirror META’s decline. Historical META volatility suggests meaningful probability of breaching 60% over three years. The unlisted structure and 2.25% sales charge diminish secondary liquidity and value. UBS’s estimated initial value (≤96.47% of par) implies a 3.5-6.5% upfront “drag.” Overall, risk-reward skews roughly neutral: attractive conditional income offset by significant downside, credit risk, and call uncertainty.
TL;DR Investors assume UBS senior unsecured credit risk; FINMA bail-in powers add tail risk not present in traditional U.S. bank notes.
Because the securities rank pari passu with other UBS senior debt, coupon and principal depend on the bank’s solvency. UBS, though highly rated, is subject to Swiss bank resolution rules allowing FINMA to write down or convert debt, including these notes, during stress. For U.S. buyers unfamiliar with Swiss bail-in regimes, this constitutes a hidden structural subordination versus secured funding. Liquidity risk is high: notes are unlisted, UBS may bid well below model value, and valuation will reflect internal funding spreads. Retail investors must be comfortable with potential mark-to-market volatility and tax uncertainty. Given these factors, I classify the impact as neutral to slightly negative for conservative portfolios.
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ISSUER FREE WRITING PROSPECTUS Filed Pursuant to Rule 433 Registration Statement No. 333-283672 Dated June 20, 2025 |
Contingent Income Auto-Callable Securities due on or about June 30, 2028
Based on the Performance of the Common Stock of Meta Platforms, Inc.
This document provides a summary of the terms of the Contingent Income Auto-Callable Securities (the “securities”). Investors should carefully review the accompanying preliminary pricing supplement for the securities, the accompanying product supplement and the accompanying prospectus, as well as the “Risk Considerations” section below, before making an investment decision.
The securities do not guarantee any return of principal at maturity. Investors will not participate in any appreciation of the underlying equity and must be willing to accept the risk of not receiving any contingent payments over the term of the securities. The securities are unsubordinated, unsecured debt obligations issued by UBS AG (“UBS”), and all payments on the securities are subject to the credit risk of UBS. As used in this document, “we,” “us,” or “our” refers to UBS.
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SUMMARY TERMS |
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Issuer: |
UBS AG London Branch |
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Underlying equity: |
Common stock of Meta Platforms, Inc. (Bloomberg Ticker: “META UW”) |
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Stated principal amount: |
$1,000.00 per security |
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Pricing date: |
Expected to be June 27, 2025 |
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Original issue date: |
Expected to be July 2, 2025 (3 business days after the pricing date; see preliminary pricing supplement). |
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Final determination date: |
Expected to be June 27, 2028, subject to postponement for certain market disruption events and as described in the accompanying product supplement. |
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Maturity date: |
Expected to be June 30, 2028, subject to postponement for certain market disruption events and as described in the accompanying product supplement. |
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Early redemption: |
If, on any determination date (other than the final determination date), the closing price of the underlying equity is equal to or greater than the call threshold level, the securities will be redeemed early and we will pay the early redemption amount on the first contingent payment date immediately following the related determination date. |
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Early redemption amount: |
The early redemption amount will be an amount equal to (i) the stated principal amount plus (ii) the contingent payment with respect to the related determination date. |
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Contingent payment: |
▪If, on any determination date, the closing price or the final price is equal to or greater than the downside threshold level, we will pay a contingent payment of $27.00 (equivalent to 10.80% per annum of the stated principal amount) per security on the related contingent payment date. ▪If, on any determination date, the closing price or the final price is less than the downside threshold level, no contingent payment will be made with respect to that determination date. |
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Determination dates: |
Quarterly (as set forth on the cover of the preliminary pricing supplement), subject to postponement for non-trading days and certain market disruption events. |
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Contingent payment dates: |
Quarterly (as set forth on the cover of the preliminary pricing supplement), subject to postponement for non-business days and certain market disruption events. |
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Payment at maturity: |
▪If the final price is equal to or greater than the downside threshold level: (i) the stated principal amount plus (ii) the contingent payment with respect to the final determination date ▪If the final price is less than the downside threshold level: the cash value UBS has elected to deliver to you cash in lieu of shares, and your payment at maturity for each security will be the cash value. If the final price is less than the downside threshold level, investors will lose a significant portion and may lose all of their initial investment. |
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Exchange ratio: |
The quotient of the stated principal amount divided by the initial price. |
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Cash value: |
The exchange ratio multiplied by the final price. |
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Call threshold level: |
100.00% of the initial price. The actual call threshold level will be determined on the pricing date. |
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Downside threshold level: |
60.00% of the initial price. The actual downside threshold level will be determined on the pricing date. |
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Initial price: |
The closing price of the underlying equity on the pricing date. |
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Final price: |
The closing price of the underlying equity on the final determination date. |
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CUSIP / ISIN: |
90308V4S7 / US90308V4S74 |
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Listing: |
The securities will not be listed or displayed on any securities exchange or any electronic communications network. |
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Commission: |
2.25% of the aggregate principal amount. |
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Estimated initial value: |
Expected to be between $934.70 and $964.70 per security. See “Risk Factors” in the preliminary pricing supplement. |
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Preliminary pricing supplement: |
http://www.sec.gov/Archives/edgar/data/1114446/000183988225034092/ubs_424b2-18380.htm |
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HYPOTHETICAL PAYOUT |
The below figures are based on a hypothetical downside threshold level of 60.00% of the hypothetical initial price of the underlying equity and are purely hypothetical (the actual terms of your security will be determined on the pricing date and will be specified in the final pricing supplement).
Hypothetical Payment at Maturity if No Early Redemption Occurs
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Change in Underlying Equity |
Payment at Maturity (excluding any contingent payment payable at maturity) |
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+50.00% |
$1,000.00 |
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+40.00% |
$1,000.00 |
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+30.00% |
$1,000.00 |
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+20.00% |
$1,000.00 |
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+10.00% |
$1,000.00 |
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0.00% |
$1,000.00 |
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-10.00% |
$1,000.00 |
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-20.00% |
$1,000.00 |
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-30.00% |
$1,000.00 |
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-40.00% |
$1,000.00 |
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-41.00% |
$590.00 |
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-50.00% |
$500.00 |
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-60.00% |
$400.00 |
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-70.00% |
$300.00 |
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-80.00% |
$200.00 |
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-90.00% |
$100.00 |
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-100.00% |
$0.00 |
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You will find a link to the accompanying preliminary pricing supplement for the securities above and links to the accompanying product supplement and accompanying prospectus for the securities under “Additional Information About UBS and the Securities” in the preliminary pricing supplement, which you should read and understand prior to investing in the securities.
The issuer has filed a registration statement (including a prospectus as supplemented by a product supplement and the preliminary pricing supplement) with the Securities and Exchange Commission (the “SEC”) for the offering to which this communication relates. Before you invest, you should read the accompanying prospectus in that registration statement and the other documents the issuer has filed with the SEC, including the accompanying preliminary pricing supplement and the accompanying product supplement, for more complete information about the issuer and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the issuer, any underwriter or any dealer participating in the offering will arrange to send you the prospectus if you request it by calling toll-free 1-833-653-0401. Our Central Index Key, or CIK, on the SEC web site is 0001114446.
Risk Considerations
The risks set forth below are discussed in more detail in the “Risk Factors” section in the preliminary pricing supplement. Please review those risk factors carefully prior to making an investment decision.
Risks Relating to Return Characteristics
▪The securities do not guarantee the return of any principal and your investment in the securities may result in a loss.
▪The contingent payment, if any, is based solely on the closing prices of the underlying equity on the specified determination dates.
▪You will not receive any contingent payment for any period where the closing price of the underlying equity on the determination date is less than the downside threshold level.
▪Higher contingent payments are generally associated with a greater risk of loss.
▪Early redemption risk.
▪Investors will not participate in any appreciation in the closing price of the underlying equity and will not have the same rights as holders of the underlying equity.
Risks Relating to Characteristics of the Underlying Equity
▪Single equity risk.
▪There can be no assurance that the investment view implicit in the securities will be successful.
▪No affiliation with the underlying equity issuer.
Estimated Value Considerations
▪The issue price you pay for the securities will exceed their estimated initial value.
▪The estimated initial value is a theoretical price and the actual price that you may be able to sell your securities in any secondary market (if any) at any time after the pricing date may differ from the estimated initial value.
▪Our actual profits may be greater or less than the differential between the estimated initial value and the issue price of the securities as of the pricing date.
Risks Relating to Liquidity and Secondary Market Price Considerations
▪There may be little or no secondary market for the securities.
▪The price at which UBS Securities LLC and its affiliates may offer to buy the securities in the secondary market (if any) may be greater than UBS’ valuation of the securities at that time, greater than any other secondary market prices provided by unaffiliated dealers (if any) and, depending on your broker, greater than the valuation provided on your customer account statements.
▪Price of securities prior to maturity.
▪Impact of fees and the use of internal funding rates rather than secondary market credit spreads on secondary market prices.
Risks Relating to Hedging Activities and Conflicts of Interest
▪Potential conflicts of interest.
▪Hedging and trading activities by the calculation agent and its affiliates could potentially affect the value of, and any amounts payable on, the securities.
▪We may engage in business with or involving the underlying equity issuer without regard to your interests.
▪Potential UBS impact on an underlying equity.
▪Following certain events, the calculation agent can make adjustments to the underlying equity and terms of the securities that may adversely affect the market value of, and return on, the securities.
Risks Relating to General Credit Characteristics
▪The securities are subject to the credit risk of UBS, and any actual or anticipated changes to our credit ratings or credit spreads may adversely affect the market value of the securities.
▪The securities are not bank deposits.
▪If UBS experiences financial difficulties, FINMA has the power to open restructuring or liquidation proceedings in respect of, and/or impose protective measures in relation to, UBS, which proceedings or measures may have a material adverse effect on the terms and market value of the securities and/or the ability of UBS to make payments thereunder.
Risks Relating to U.S. Federal Income Taxation
▪Uncertain tax treatment. Significant aspects of the tax treatment of the securities are uncertain. You should consult your tax advisor about your tax situation. See “Tax Considerations” in the preliminary pricing supplement and “Material U.S. Federal Income Tax Consequences”, including the section “— Securities Treated as Prepaid Derivatives or Prepaid Forwards with Associated Contingent Coupons”, in the accompanying product supplement.
Underlying Equity
For information about the underlying equity, including historical performance information, see “Information About the Underlying Equity” in the preliminary pricing supplement.
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FAQ
What coupon does the UBS Contingent Income Auto-Callable pay?
When can the securities linked to META be auto-called?
How much principal protection do investors in WUCT’s referenced FWP get?
What is the estimated initial value of these UBS notes?
Will the securities be listed on an exchange?
