OREANDA-NEWS. Fitch Ratings has assigned UBS Group Funding (Jersey) Limited's USD30bn senior debt programme guaranteed by UBS Group AG Long-term 'A' and Short-term 'F1' programme ratings.

The Long-term programme rating is in line with the issue ratings assigned to the unsubordinated notes issued by UBS Group Funding (Jersey) Limited and guaranteed by UBS Group AG (see "Fitch Assigns UBS's HoldCo Senior Debt 'A' Final Rating" on www.fitchratings.com).

It should be noted that the ratings are assigned to the programme and not to the notes issued under the programme. There is no assurance that notes issued under the programme will be assigned a rating, or that the rating assigned to a specific issue under the programme will have the same rating as the rating assigned to the programme.

KEY RATING DRIVERS
The programme ratings are in line with the Issuer Default Ratings (IDR) of the guarantor, UBS Group AG (A/Positive/F1). Notes issued under the terms of the programme are irrevocably and unconditionally guaranteed by UBS Group AG, and constitute unsubordinated and unsecured obligations of the issuer. The terms of the programme stipulate that investors acknowledge and accept to be bound by Swiss resolution powers. We expect notes issued under the programme to qualify for inclusion in gone concern capital under the new Swiss regulations and in total loss-absorbing capacity (TLAC). UBS Group Funding (Jersey) Limited is a non-Swiss special purpose vehicle, which is not subject to Swiss withholding tax on interest payments.

The programme prospectus highlights the wide-ranging power of the Swiss Financial Market Supervisory Authority (FINMA), which may at its discretion exercise its resolution powers during restructuring proceedings of UBS Group AG with respect to notes issued under the programme, ahead of other senior liabilities excluded from bail-in. Although this means that FINMA could impose losses on senior holding company noteholders ahead of the resolution of the operating bank, we believe that the volume of debt and hybrid capital issued by UBS Group AG, the holding company, would be insufficient to restore the group's viability without bailing in junior debt instruments issued by the operating bank.

RATING SENSITIVITIES
The programme ratings are in line with UBS Group AG's Long- and Short-term IDRs and are therefore primarily sensitive to changes to UBS Group AG's IDRs. UBS Group AG's IDRs are equalised with those of its main operating subsidiary, UBS AG, reflecting its role as a holding company, our expectation that double leverage at the holding company will remain well below 120% and our view that the Swiss regulator considers the group as a consolidated entity.

The Positive Outlook on UBS Group AG's Long-term IDR reflects Fitch's view that further progress in executing the group's strategy should result in a stronger company profile, which could result in an upgrade of the Long-term IDR (see "Fitch Revises UBS Group AG's Outlook to Positive; Affirms at 'A'" on www.fitchratings.com). All else being equal, an upgrade in the Long-term IDR would result in the upgrade of the programme's Long-term rating.

Increasing holding company double leverage, which could arise from mismatches in downstreaming the proceeds of holding company debt issuance to the operating companies, could result in UBS Group AG's IDRs being rated below UBS AG's IDRs, and therefore in a downgrade of the programme ratings.