UBS Turmoil doesn’t stall ETN Rollout

April 7, 2008 

SAN DIEGO (ETFguide.com) - Despite massive multi-billion dollar write-downs and a growing chorus of angry activist shareholders, UBS AG has introduced eight new commodity linked exchange-traded notes (ETNs).  

The UBS E-TRACS ETNs listed and began trading last week on the NYSE Arca.

The latest notes are linked to the performance of both the broader UBS Bloomberg Constant Maturity Commodity Index (CMCI) and its more narrowly focused sub-indexes.

These ETNs are trade under the following ticker symbols:

--E-TRACS linked to the UBS Bloomberg CMCI Index (Ticker: UCI)

--E-TRACS linked to the UBS Bloomberg CMCI Industrial Metals Index (Ticker: UBM)

--E-TRACS linked to the UBS Bloomberg CMCI Energy Index (Ticker: UBN)

--E-TRACS linked to the UBS Bloomberg CMCI Agriculture Index (Ticker: UAG)

--E-TRACS linked to the UBS Bloomberg CMCI Livestock Index (Ticker: UBC)

--E-TRACS linked to the UBS Bloomberg CMCI Food Index (Ticker: FUD)

--E-TRACS linked to the UBS Bloomberg CMCI Gold Index (Ticker: UBZ)

--E-TRACS linked to the UBS Bloomberg CMCI Silver Index (Ticker: USV)

ETNs are debt securities backed by the credit of the issuer.

As major financial institutions have become engulfed in the firestorm of mounting credit losses, investors are becoming more sensitive to taking on credit issuer risk. The price and value of ETNs is acutely affected by the credit rating of the issuing bank or investment firm.

The timing of the UBS launch seems particularly curious.

Just as the ETNs were listed last week for trading, the Swiss investment bank announced $37.4 billion in write-downs on bad investments over the past nine months. According to news reports, UBS AG is seeking an infusion of $33.5 billion in additional capital.

Activist investor Luqman Arnold has publicly called for UBS to consider selling its investment bank, saying the massive losses incurred had damaged confidence in the bank's current business strategy.