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Subject to Completion
PRELIMINARY PRICING SUPPLEMENT
Dated June 1,
2020
Filed Pursuant to Rule 424(b)(2)
Registration Statement No. 333-225551
(To Prospectus dated October 31,
2018 and
Prospectus Supplement dated October 31, 2018)
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UBS AG
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$
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Callable Step-Up Notes
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due on or about June 23, 2027
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The Callable Step-Up Notes due on or
about June 23, 2027 (the “Notes”) are unsubordinated, unsecured debt securities issued by UBS AG
(“UBS” or the “issuer”) that have a term of approximately7 years, subject to our right to redeem
the Notes on the optional redemption dates as set forth below. The Notes pay interest on the interest payment dates at a per
annum rate that will increase at preset intervals over the term of the Notes, as set forth below. However, you should not
expect to earn the higher stated interest rate described below because the Notes may be redeemed by UBS in its absolute and
sole discretion in accordance with optional redemption, as set forth below. Investing in the Notes involves significant
risks. Any payment on the Notes, including any repayment of principal, is subject to the creditworthiness of UBS. If UBS were
to default on its payment obligations, you may not receive any amounts owed to you under the Notes and you could lose all of
your investment.
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Issuer:
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UBS AG London
Branch (“UBS”)
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Principal Amount & Denominations:
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$1,000 per Note. The Notes will be issued in denominations of $1,000 per Note and any integral multiples of
$1,000.
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Original
Offering/Issue Price:
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$1,000 per Note.
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Pricing Date:
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Expected to be June 19, 2020.*
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Issue Date:
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Expected to be June 23, 2020.*
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Maturity Date:
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Expected to be June 23, 2027,* subject to optional redemption by UBS as set forth below
under “Optional Redemption”. The Notes are not subject to repayment at the option of any holder of the Notes
prior to the maturity date.
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Payment at Maturity:
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100% of the principal amount plus any accrued and unpaid interest.
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Interest Payment Dates:
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Quarterly, on the 23rd day of each March, June, September and December, beginning
September 23, 2020 and ending on the Maturity Date, subject to the business day convention.
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Interest Period:
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For each interest payment date, the period from and including the previous interest payment date
(or the issue date in the case of the first interest payment date) to and excluding such interest payment date (or, in the case
of an optional redemption, the optional redemption date).
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Interest Rate:
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• For each interest period from and including the issue date to and excluding June 23,
2023: 1.25% per annum
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• For each interest period from and including June 23, 2023 to and excluding December
23, 2025: 1.50% per annum
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• For each interest period from and including December 23, 2025 to and excluding the
stated maturity date: 2.00% per annum
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Any payment on the Notes, including any repayment
of principal, is subject to the creditworthiness of UBS. If UBS were to default on its payment obligations, you may not receive
any amounts owed to you under the Notes and you could lose all of your investment.
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Optional Redemption:
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We may, in our absolute and sole discretion, redeem your Notes, in whole but not in part, at the redemption price
set forth below on any optional redemption date. Before we elect to redeem your Notes, we will deliver written notice to the trustee
at least twenty business days prior to the optional redemption date.
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Optional Redemption Dates:
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Quarterly, on the 23rd day of each March, June, September and December, beginning June 23, 2021
(the "first optional redemption date") and ending March 23, 2027.
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Redemption Price:
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If the Notes are subject to optional redemption, on the optional redemption date, you will
receive 100% of the principal amount plus any accrued and unpaid interest to but excluding the optional redemption date.
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Business Days:
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New York
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Business Day Convention:
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Modified Following; Unadjusted (applicable to interest payment dates (including the maturity
date, as applicable) and optional redemption dates)
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Day Count Convention:
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30/360
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Listing:
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The Notes will not be listed or displayed on any securities exchange or electronic
communications network.
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CUSIP / ISIN:
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90276BDC4 / US90276BDC46
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In the event that we make any changes to the expected pricing date and issue date, we may adjust the interest payment dates, the optional redemption dates and the maturity date to ensure that the stated term of the Notes remains the same.
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You should carefully consider the
risks described under "Risk Factors" beginning on page 2 herein and on S-5 of the accompanying prospectus supplement
relating to the Notes, dated October 31, 2018 before purchasing any Notes.
See “Additional
Information About UBS and the Notes” on page ii herein. The Notes we are offering will have the terms set forth in the accompanying
prospectus supplement and the accompanying prospectus, as modified by this document.
Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these Notes or passed upon the adequacy or accuracy of this document, the accompanying prospectus supplement or the accompanying prospectus. Any representation to the contrary is a criminal offense.
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Offering of Notes
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Issue Price to Public(1)
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Underwriting Discount(1)(2)
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Proceeds to UBS AG(2)
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Total
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Per Note
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Total
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Per Note
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Total
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Per Note
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Callable Step-Up Notes
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$•
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$1,000.00
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$•
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Up to $7.50
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$•
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At least $992.50
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(1)
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Notwithstanding the underwriting discount received by one or more third-party
dealers from UBS Securities LLC described below, certain registered investment advisers or fee-based advisory accounts
unaffiliated from UBS may purchase Notes from a third-party dealer at a purchase price of at least $992.50 per principal amount
of the Notes, and such third-party dealer, with respect to such sales, may forgo some or all of the underwriting
discount.
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(2)
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Our affiliate, UBS Securities LLC, will receive an underwriting
discount of up to $7.50 per principal amount for each Note sold in this offering. UBS Securities LLC intends to re-allow the full
amount of this discount to one or more third party dealers. Certain of such third-party dealers may resell the Notes to other securities
dealers at the issue price to the public less the underwriting discount indicated in the above table. The per Note proceeds to
UBS AG indicated above represent the minimum per Note proceeds. The actual per Note proceeds to UBS AG will depend on the underwriting
discount actually applicable to the Note. The underwriting discount per Note may be variable and fluctuate depending on market
conditions at the time UBS AG establishes its hedge on or prior to the pricing date. The total underwriting discount and proceeds
to UBS AG, which will be disclosed in the final pricing supplement, will reflect the total amount of the underwriting discount
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UBS Securities LLC
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UBS Investment Bank
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ADDITIONAL INFORMATION ABOUT UBS
AND THE NOTES
UBS has filed a registration statement (including a prospectus, as supplemented by a prospectus supplement for the Notes) with the
Securities and Exchange Commission (the “SEC”) for the offering to which this document relates. Before you invest,
you should read these documents and any other documents related to the Notes that UBS has filed with the SEC for more complete
information about UBS and this offering. You may obtain these documents for free from the SEC website at www.sec.gov. Our Central
Index Key, or CIK, on the SEC website is 0001114446.
You may access the prospectus supplement and prospectus on the
SEC website www.sec.gov as follows:
References to “UBS,” “we,” “our”
and “us” refer only to UBS AG and not to its consolidated subsidiaries and references to “Notes” refer
to the Callable Step-Up Notes that are offered hereby, unless the context otherwise requires. Also, references to the “accompanying
prospectus supplement” mean the UBS prospectus supplement, dated October 31, 2018 and references to the “accompanying
prospectus” mean the UBS prospectus titled “Debt Securities and Warrants,” dated October 31, 2018.
This document, together with the documents listed above, contains
the terms of the Notes and supersedes all other prior or contemporaneous oral statements as well as any other written materials
including all other prior pricing terms, correspondence, trade ideas, structures for implementation, sample structures, brochures
or other educational materials of ours. You should carefully consider, among other things, the matters set forth in “Risk
Factors” herein and in “Risk Factors” of the accompanying prospectus supplement, as the Notes involve risks not
associated with conventional debt securities. We urge you to consult your investment, legal, tax, accounting and other advisors
concerning an investment in the Notes.
UBS reserves the right to change the terms of, or reject any offer
to purchase, the Notes prior to their issuance. In the event of any changes to the terms of the Notes, UBS will notify you and
you will be asked to accept such changes in connection with your purchase. You may also choose to reject such changes in which
case UBS may reject your offer to purchase.
If there is any inconsistency between
the terms of the Notes described in the accompanying prospectus, the accompanying prospectus supplement and this document,
the following hierarchy will govern: first, this document; second, the accompanying prospectus supplement; and last, the
accompanying prospectus.
INVESTOR CONSIDERATIONS
The Notes may be suitable for you if:
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You seek an investment with fixed rate interest
that, provided there is no early redemption at UBS’ option, increases during the term of the Notes and are willing to invest
in the Notes based on the interest rate as indicated on the cover hereof.
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You are willing to invest in Notes that may be redeemed early at our election and in our absolute and sole
discretion on each optional redemption date, are otherwise willing to hold such Notes to maturity and accept that there may be
no secondary market for the Notes.
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You are willing to assume the credit risk of UBS for all payments under the Notes, and understand that if
UBS defaults on its obligations you may not receive any amounts due to you including but not limited to any repayment of principal.
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The
Notes may not be suitable for you if:
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You seek an investment with a variable rate of interest during the term of the Notes or are unwilling to invest
in the Notes based on the interest rate as indicated on the cover hereof.
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You are unable or unwilling to hold Notes that may be redeemed early at our election on each optional redemption
date, are otherwise unable or unwilling to hold such Notes to maturity or seek an investment for which there will be an active
secondary market.
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You are not willing to assume the credit risk of UBS for all payments under the Notes, including any repayment
of principal.
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The investor
considerations identified above are not exhaustive. Whether or not the Notes are a suitable investment for you will depend on
your individual circumstances and you should reach an investment decision only after you and your investment, legal, tax,
accounting and other advisors have carefully considered the suitability of an investment in the Notes in light of your
particular circumstances. You should also review “Risk Factors” herein and the more detailed
“Risk Factors” beginning on S-5 of the prospectus supplement for risks related to an investment in the
Notes.
RISK FACTORS
An investment in the Notes involves
significant risks. Some of the risks that apply to the Notes are summarized below, but we urge you to read the more detailed explanation
of risks relating to the Notes generally in the “Risk Factors” section of the accompanying prospectus supplement. We
also urge you to consult your investment, legal, tax, accounting and other advisors regarding an investment in the Notes.
The amount of interest you receive may be less than the
return you could earn on other investments.
Interest rates may change significantly
over the term of the Notes, and it is impossible to predict what interest rates will be at any point in the future. Although the
interest rate on the Notes will increase to preset rates at scheduled intervals during the term of the Notes, the interest rate
that will apply at any time on the Notes may be more or less than prevailing market interest rates at such time. As a result, the
amount of interest you receive on the Notes may be less than the return you could earn on other investments.
We may redeem the Notes prior
to maturity and prior to any increase in the interest rate.
We have the right in our absolute
and sole discretion to redeem the Notes early, in whole but not in part, on any optional redemption date, beginning on the first
optional redemption date specified on the cover hereof, at a redemption price equal to 100% of the principal amount of the Notes
plus accrued and unpaid interest to and excluding the optional redemption date. The aggregate amount that you will receive on the
Notes if the Notes are redeemed on an optional redemption date will be less than the aggregate amount that you would have received
had the Notes not been redeemed early because you will not receive any interest payments after the optional redemption date. If
we redeem the Notes prior to maturity, you will receive no further interest payments and may have to reinvest the proceeds in a
lower-rate environment. Additionally, we may elect to redeem the Notes prior to any increase in the interest rate so
you should not expect to receive any higher interest rate indicated on the cover hereof.
To the extent you are able to reinvest
such proceeds in an investment comparable to the Notes, you may incur transaction costs such as dealer discounts and hedging costs
built into the price of the new Notes. Therefore, the Notes are more likely to remain outstanding when the expected amount payable
on the Notes is less than what would be payable on other comparable instruments issued by UBS.
The interest rate on the Notes at a
particular time will affect our decision to redeem the Notes.
It is more likely that we will redeem
the Notes prior to the maturity date during periods when the remaining interest will accrue on the Notes at a rate that is greater
than that which we would pay on a conventional fixed-rate note of comparable maturity. Therefore, if we redeem the
Notes prior to the maturity date, it is more likely that you will not be able to invest in an equivalent investment with a similar
interest rate.
Credit risk of UBS.
The Notes are unsubordinated,
unsecured debt obligations of the issuer, UBS, and are not, either directly or indirectly, an obligation of any third party. Any
payment to be made on the Notes, including but not limited to any repayment of principal upon redemption or maturity, depends
on the ability of UBS to satisfy its obligations as they come due. As a result, the actual and perceived creditworthiness of UBS
may affect the market value of the Notes and, in the event UBS were to default on its obligations, you may not receive any amounts
owed to you under the terms of the Notes and you could lose all of your investment.
The step-up feature presents different
investment considerations than fixed rate notes.
Whether the interest rate on the
Notes will increase from the initial interest rate will be subject to our right to redeem the Notes. If we do not redeem the
Notes, the interest rate will step up as described herein. However, you should not expect to earn any higher stated interest
rate because, unless general interest rates
rise significantly, the Notes will likely be redeemed prior to the maturity date and potentially before any interest rate
step-up. When determining whether to invest in the Notes, you should consider, among other things, the overall annual
percentage rate of interest to redemption as compared to other equivalent investment alternatives rather than the higher
stated interest rates which are applicable only after the first 3 years of the term of the Notes.
There may be no secondary market for the Notes.
The Notes will not be listed or displayed on any securities
exchange or any electronic communications network. There can be no assurance that a secondary market for the Notes will develop.
UBS Securities LLC and its affiliates intend, but are not required, to make a market in the Notes and may in its absolute and sole
discretion and without notice stop making a market at any time. The price, if any, at which you may be able to sell your Notes
prior to maturity could be at a substantial discount from the issue price and to their intrinsic value and you may suffer substantial
losses as a result.
The price at which UBS Securities LLC and its affiliates
may offer to buy the Notes in the secondary market (if any) may be greater than UBS’ valuation of the Notes 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.
For a limited period of time following the issuance of the
Notes, UBS Securities LLC or its affiliates may offer to buy or sell such Notes at a price that exceeds (i) our valuation of the
Notes at that time based on our internal pricing models, (ii) any secondary market prices provided by unaffiliated dealers (if
any) and (iii) depending on your broker, the valuation provided on customer account statements. The price that UBS Securities LLC
may initially offer to buy such Notes following issuance will exceed the valuation of the Notes indicated by our internal pricing
models due to the inclusion for a limited period of time of the aggregate value of the underwriting discount, hedging costs, issuance
costs and theoretical projected trading profit. The portion of such amounts included in our price will decline to zero on a straight
line basis over a period ending no later than the date specified under “Supplemental Plan of Distribution (Conflicts of Interest);
Secondary Markets (if any).” Thereafter, if UBS Securities LLC or an affiliate makes secondary markets in the Notes, it will
do so at prices that reflect our valuation of the Notes determined by reference to our internal pricing models at that time. The
temporary positive differential relative to our internal pricing models arises from requests from and arrangements made by UBS
Securities LLC with the selling agents of the Notes. As described above, UBS Securities LLC and its affiliates intend, but are
not required, to make a market for the Notes and may stop making a market at any time. The price at which UBS Securities LLC or
an affiliate may make secondary markets at any time (if at all) will also reflect its then current bid-ask spread for similar sized
trades of debt securities similar to the Notes. UBS Securities LLC and its affiliates reflect this temporary positive differential
on their customer statements. Investors should inquire as to the valuation provided on customer account statements provided by
unaffiliated dealers.
Impact of fees on the secondary market price of the Notes.
Generally, the price of the Notes in the secondary market is likely
to be lower than the issue price to the public because the issue price to the public includes, and secondary market prices are
likely to exclude, the underwriting discount, hedging costs, projected trading profit and any other compensation paid with respect
to the Notes. In addition, any such prices may differ from values determined by pricing models used by UBS AG or its affiliates,
as a result of dealer discounts, mark-ups or other transactions.
Potential conflicts of interest.
With regard to your Notes, from time to
time, UBS and/or its affiliates may acquire or dispose of long or short positions in listed and/or over-the-counter options, futures,
exchange-traded funds or other instruments based on interest rates (as described under in “Use of Proceeds and Hedging”
in the accompanying prospectus supplement) which may adversely affect the market value of the Notes.
UBS and its affiliates expect to engage in trading activities,
relating to the above mentioned instruments that may affect interest rates that are not for the account of holders of the Notes
or on their behalf. These trading activities may present a conflict between the holders’ interest in the Notes and the interests
UBS and its affiliates will have in facilitating these transactions. These trading activities, if they influence the levels of
prevailing interest rates, could be adverse to the interests of the holders of the Notes.
Additionally, UBS and its affiliates act in
various capacities with respect to the Notes. We and our affiliates may act as a principal, agent or dealer in connection with the
sale of the Notes. Such affiliates, and any other placement agent or third party dealer, including the sales representatives, may
derive compensation from the distribution of the Notes and such compensation may serve as an incentive to sell these Notes instead
of other investments. We will pay total underwriting compensation in an amount up to the underwriting discount listed on the cover
hereof per Note to any of our affiliates, other placement agents and/or third party dealers acting as agents or dealers in
connection with the distribution of the Notes. Given that UBS Securities LLC and its affiliates temporarily maintain a market making
premium, it may have the effect of discouraging UBS Securities LLC and its affiliates from recommending sale of your Notes in the
secondary market.
Potentially inconsistent research, opinions or recommendations
by UBS.
UBS and its affiliates publish research from time to time on
financial markets and other matters that may influence the value of the Notes, or express opinions or provide recommendations that
are inconsistent with purchasing or holding the Notes. Any research, opinions or recommendations expressed by UBS or its affiliates
may not be consistent with each other and may be modified from time to time without notice. Investors should make their own independent
investigation of the merits of investing in the Notes.
The Notes are not bank deposits.
An investment in the Notes carries risks which are very different
from the risk profile of a bank deposit placed with UBS or its affiliates. The Notes have different yield and/or return, liquidity
and risk profiles and would not benefit from any protection provided to 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 Notes
and/or the ability of UBS to make payments thereunder.
The Swiss Financial Market Supervisory
Authority (“FINMA”) has broad statutory powers to take measures and actions in relation to UBS if (i) it concludes
that there is justified concern that UBS is over-indebted or has serious liquidity problems or (ii) UBS fails to fulfill the applicable
capital adequacy requirements (whether on a standalone or consolidated basis) after expiry of a deadline set by FINMA. If one of
these pre-requisites is met, FINMA is authorized to open restructuring proceedings or liquidation (bankruptcy) proceedings in respect
of, and/or impose protective measures in relation to, UBS. The Swiss Banking Act grants significant discretion to FINMA in connection
with the aforementioned proceedings and measures. In particular, a broad variety of protective measures may be imposed by FINMA,
including a bank moratorium or a maturity postponement, which measures may be ordered by FINMA either on a stand-alone basis or
in connection with restructuring or liquidation proceedings. The resolution regime of the Swiss Banking Act is further detailed
in the FINMA Banking Insolvency Ordinance (“BIO-FINMA”). In a restructuring proceeding, FINMA, as resolution authority,
is competent to approve the resolution plan. The resolution plan may, among other things, provide for (a) the transfer of all or
a portion of UBS’ assets, debts, other liabilities and contracts (which may or may not include the contractual relationship
between UBS and the holders of Notes) to another entity, (b) a stay (for a maximum of two business days) on the termination of
contracts to which UBS is a party, and/or the exercise of (w) rights to terminate, (x) netting rights, (y) rights to enforce or
dispose of collateral or (z) rights to transfer claims, liabilities or collateral under contracts to which UBS is a party, (c)
the conversion of UBS’ debt and/or other obligations, including its obligations under the Notes, into equity (a “debt-to-equity”
swap), and/or (d) the partial or full write-off of obligations owed by UBS (a “write-off”), including its obligations
under the Notes. The BIO-FINMA provides that a debt-to-equity swap and/or a write-off of debt and other obligations (including
the Notes) may only take place after (i) all debt instruments issued by UBS qualifying as additional tier 1 capital or tier 2 capital
have been converted into equity or written-off, as applicable, and (ii) the existing equity of UBS has been fully cancelled. While
the BIO-FINMA does not expressly address the order in which a write-off of debt instruments other than debt instruments qualifying
as additional tier 1 capital or tier 2 capital should occur, it states that debt-to-equity swaps should occur in the following
order: first, all subordinated claims not qualifying as regulatory capital; second, all other claims not excluded by law from a
debt-to-equity swap (other than deposits); and third, deposits (in excess of the amount privileged by law). However, given the
broad discretion granted to FINMA as the resolution authority, any restructuring plan in respect of UBS could provide that the
claims under or in connection with the Notes will be partially or fully converted into equity or written-off, while preserving
other obligations of UBS that rank pari passu with, or even junior to, UBS’ obligations under the Notes. Consequently, holders
of Notes may lose all or some of their investment in the Notes. In the case of restructuring proceedings with respect to a systemically
important Swiss bank (such as UBS), the creditors whose claims are affected by the restructuring plan will not have a right to
vote on, reject, or seek the suspension of the restructuring plan. In addition, if a restructuring plan has been approved by FINMA,
the rights of a creditor to seek judicial review of the restructuring plan (e.g., on the grounds that the plan would unduly prejudice
the rights of holders of Notes or otherwise be in violation of the Swiss Banking Act) are very limited. In particular, a court
may not suspend the implementation of the restructuring plan. Furthermore, even if a creditor successfully challenges the restructuring
plan, the court can only require the relevant creditor to be compensated ex post and there is currently no guidance as to on what
basis such compensation would be calculated or how it would be funded.
UNITED STATES FEDERAL TAX CONSIDERATIONS
The U.S. federal income tax consequences
of your investment in the Notes are summarized below, but we urge you to read the more detailed discussion in “Material
U.S. Federal Income Tax Considerations”, including the section “—Notes treated as Indebtedness for U.S. Federal
Income Tax Purposes”, in the accompanying prospectus supplement and discuss the tax consequences of your particular situation
with your tax advisor. This discussion is based upon the Internal Revenue Code of 1986, as amended (the “Code”), final,
temporary and proposed U.S. Treasury Department (the “Treasury”) regulations, rulings and decisions, in each case,
as available and in effect as of the date hereof, all of which are subject to change, possible with retroactive effect. Tax consequences
under state, local and non-U.S. laws are not addressed herein. No ruling from the U.S. Internal Revenue Service (the “IRS”)
has been sought as to the U.S. federal income tax consequences of your investment in the Notes, and the following discussion is
not binding on the IRS.
The Notes should be treated as indebtedness
for U.S. federal income tax purposes, and the balance of this summary assumes that the Notes are treated as indebtedness for U.S.
federal income tax purposes.
We intend to take the position that, solely
for purposes of determining whether the Notes are issued with original issue discount, we are deemed to exercise our option to
redeem the Notes prior to each interest rate step-up and, as a result, interest payments on the Notes will be taxable to a U.S.
holder as non-U.S.-source ordinary interest income at the time it accrues or is received in accordance with the U.S. holder’s
normal method of accounting for tax purposes. Pursuant to the terms of the Notes, you agree to treat the Notes consistent with
our treatment for all U.S. federal income tax purposes.
Our counsel, Cadwalader, Wickersham
& Taft LLP, is of the opinion that your Notes should be treated as described above. However, the U.S. federal income tax treatment
of the Notes is uncertain. We do not plan to request a ruling from the IRS regarding the tax treatment of the Notes, and the IRS
or a court may not agree with the tax treatment described herein. We urge you to consult your tax advisor as to the tax consequences
of your investment in the Notes.
Sale, Exchange, Early Redemption or Maturity
of the Notes
Upon the disposition
of a Note by sale, exchange, early redemption, maturity or other taxable disposition, a U.S. holder should generally recognize
gain or loss equal to the difference between (1) the amount realized on such taxable disposition (other than amounts attributable
to accrued but unpaid interest) and (2) the U.S. holder’s adjusted tax basis in the Note. A U.S. holder’s adjusted
tax basis in a Note generally will equal the U.S. holder’s cost of acquiring such Note. Assuming a Note is held as a capital
asset, such gain or loss will generally constitute capital gain or loss. Capital gain of a noncorporate U.S. holder is generally
taxed at preferential rates where the holder has a holding period of greater than one year. The deductibility of a capital losses
is subject to limitations.
Medicare Tax on Net
Investment Income
U.S. holders that are individuals,
estates or certain trusts are subject to an additional 3.8% tax on all or a portion of their “net investment
income,” or “undistributed net investment income” in the case of an estate or trust, which may include any
income or gain realized with respect to the Notes, to the extent of their net investment income or undistributed net
investment income (as the case may be) that, when added to their other modified adjusted gross income, exceeds $200,000 for
an unmarried individual, $250,000 for a married taxpayer filing a joint return (or a surviving spouse), $125,000 for a
married individual filing a separate return or the dollar amount at which the highest tax bracket begins for an estate or
trust. The 3.8% Medicare tax is determined in a different manner than the income tax. U.S. holders should consult their tax
advisors with respect to the consequences of the 3.8% Medicare tax.
Specified Foreign Financial Assets
Certain U.S. holders that own “specified foreign financial assets”
in excess of an applicable threshold may be subject to reporting obligations with respect to such assets with their tax returns,
especially if such assets are held outside the custody of a U.S. financial institution. U.S. holders are urged to consult their
tax advisors as to the application of this reporting obligation to your ownership of the Notes.
Tax Treatment of
Non-U.S. Holders
Subject to “FATCA”, discussed below, if you
are a non-U.S. holder you should generally not be subject to U.S. withholding tax with respect to payments or gain realized
on your Notes or to generally applicable information reporting and backup withholding requirements with respect to payments
or gain realized on your Notes if you comply with certain certification and identification requirements as to your non-U.S.
status (by providing us (and/or the applicable withholding agent) with a fully completed and duly executed applicable IRS
Form W-8). Gain from the taxable disposition of a Note generally should not be subject to U.S. tax unless (i) such gain is
effectively connected with a trade or business conducted by the non-U.S. holder in the U.S., (ii) the non-U.S. holder is
a non-resident alien individual and is present in the U.S. for more than 182 days in the taxable year of such taxable
disposition and certain other conditions are satisfied or (iii) the non-U.S. holder has certain other present or former
connections with the U.S.
Foreign Account Tax Compliance
Act. The Foreign Account Tax Compliance Act (“FATCA”) was enacted on March 18, 2010, and imposes a 30% U.S.
withholding tax on “withholdable payments” (i.e., certain U.S.-source payments, including interest (and original
issue discount), dividends, other fixed or determinable annual or periodical gain, profits, and income, and on the gross
proceeds from a disposition of property of a type which can produce U.S.-source interest or dividends) and “passthru
payments” (i.e., certain payments attributable to withholdable payments) made to certain foreign financial institutions
(and certain of their affiliates) unless the payee foreign financial institution agrees (or is required), among other things,
to disclose the identity of any U.S. individual with an account of the institution (or the relevant affiliate) and to
annually report certain information about such account. FATCA also requires withholding agents making withholdable payments
to certain foreign entities that do not disclose the name, address, and taxpayer identification number of any substantial
U.S. owners (or do not certify that they do not have any substantial U.S. owners) to withhold tax at a rate of 30%. Under
certain circumstances, a holder may be eligible for refunds or credits of such taxes.
Pursuant to final and temporary Treasury regulations and other
IRS guidance, the withholding and reporting requirements under FATCA will generally apply to certain “withholdable payments”,
will not apply to gross proceeds on a sale or disposition, and will apply to certain foreign passthru payments only to the extent
that such payments are made after the date that is two years after final regulations defining the term “foreign passthru payment”
are published. If withholding is required, we (or the applicable paying agent) will not be required to pay additional amounts
with respect to the amounts so withheld. Foreign financial institutions and non-financial foreign entities located in jurisdictions
that have an intergovernmental agreement with the U.S. governing FATCA may be subject to different rules.
Investors should consult their advisors about the application of FATCA,
in particular if they may be classified as financial institutions (or if they hold their Notes through a foreign entity) under
the FATCA rules.
You are urged to consult your tax advisors concerning the application
of U.S. federal income tax laws to your particular situation, as well as any tax consequences of the purchase, beneficial ownership
and disposition of the Notes arising under the laws of any state, local, non-U.S. or other taxing jurisdiction.
SUPPLEMENTAL PLAN OF DISTRIBUTION (CONFLICTS OF INTEREST);
SECONDARY MARKETS (IF ANY)
We will agree to sell to UBS Securities LLC,
and UBS Securities LLC will agree to purchase, all of the Notes at the issue price to the public less the underwriting discount
indicated on the cover hereof. UBS Securities LLC intends to resell the Notes to one or more third-party dealers at the issue price
to public less the underwriting discount indicated on the cover hereof. Certain of such third-party dealers may resell the Notes to
other securities dealers at the issue price to the public less the underwriting discount indicated on the cover hereof. The per Note
proceeds to UBS AG indicated on the cover hereof represent the minimum per Note proceeds. The underwriting discount per Note may be
variable and fluctuate depending on market conditions at the time UBS AG establishes its hedge on or prior to the pricing date. The
total underwriting discount and proceeds to UBS AG, which will be disclosed in the final pricing supplement, will reflect the total
amount of the underwriting discount. Certain unaffiliated registered investment advisers or fee-based advisory accounts may purchase
Notes from a third-party dealer at a purchase price of at least $992.50 per principal amount of the Notes, and such third-party
dealer, with respect to such sales, may forgo some or all of the underwriting discount.
Conflicts of Interest
UBS Securities LLC is an affiliate of UBS and,
as such, has a “conflict of interest” in this offering within the meaning of Financial Industry Regulatory Authority,
Inc. (“FINRA”) Rule 5121. In addition, UBS will receive the net proceeds (excluding the underwriting discount) from
the initial public offering of the Notes, thus creating an additional conflict of interest within the meaning of FINRA Rule 5121.
Consequently, the offering is being conducted in compliance with the provisions of FINRA Rule 5121. UBS Securities LLC is not permitted
to sell Notes in this offering to an account over which it exercises discretionary authority without the prior specific written
approval of the account holder.
UBS Securities LLC and
its affiliates may offer to buy or sell the Notes in the secondary market (if any) at prices greater than UBS’ valuation
of the Notes at that time
The value of the Notes at any time will
vary based on many factors that cannot be predicted. However, the price (not including UBS Securities LLC’s or any affiliate’s
customary bid-ask spreads) at which UBS Securities LLC or any affiliate would offer to buy or sell the Notes immediately after
the pricing date in the secondary market is expected to exceed the valuation of the Notes as determined by reference to our internal
pricing models. The amount of the excess will decline to zero on a straight line basis over a period ending no later than 6
months after the pricing date, provided that UBS Securities LLC may shorten the period based on various factors, including the
magnitude of purchases and other negotiated provisions with selling agents. Notwithstanding the foregoing, UBS Securities LLC
and its affiliates are not required to make a market for the Notes and may stop making a market at any time. For more information
about secondary market offers, see “Risk Factors — There may be no secondary market for the Notes”, “Risk
Factors —The price at which UBS Securities LLC and its affiliates may offer to buy the Notes in the secondary market (if
any) may be greater than UBS’ valuation of the Notes 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”
and “Risk Factors — Impact of fees on the secondary market price of the Notes” herein.
Prohibition of Sales to EEA Retail Investors
The Notes are not intended to be
offered, sold or otherwise made available to and should not be offered, sold or otherwise made available to any retail investor
in the European Economic Area (“EEA”). For these purposes, a retail investor means a person who is one (or more) of:
(i) a retail client as defined in point (11) of Article 4(1) of Directive 2014/65/EU, as amended (“MiFID II”); (ii)
a customer within the meaning of Directive 2002/92/EC, as amended, where that customer would not qualify as a professional client
as defined in point (10) of Article 4(1) of MiFID II; or (iii) not a qualified investor as defined in Directive 2003/71/EC, as
amended. Consequently no key information document required by Regulation (EU) No 1286/2014, as amended (the “PRIIPs Regulation”),
for offering or selling the Notes or otherwise making them available to retail investors in the EEA has been prepared and therefore
offering or selling the Notes or otherwise making them available to any retail investor in the EEA may be unlawful under the PRIIPs
Regulation.
You should rely only on the information incorporated
by reference or provided in this preliminary pricing supplement, the accompanying prospectus supplement or the accompanying prospectus.
We have not authorized anyone to provide you with different information. We are not making an offer of these Notes in any state
where the offer is not permitted. You should not assume that the information in this preliminary pricing supplement is accurate
as of any date other than the date on the front of the document.
TABLE
OF CONTENTS
Preliminary Pricing Supplement
|
Additional Information About UBS and the Notes
|
ii
|
|
Investor Considerations
|
1
|
|
Risk Factors
|
2
|
|
United States Federal Tax Considerations
|
4
|
|
Supplemental Plan of Distribution (Conflicts of Interest); Secondary Markets (if any)
|
5
|
Prospectus Supplement
|
Prospectus Supplement Summary
|
S-1
|
|
What are the Notes?
|
S-1
|
|
The Notes are Part of a Series
|
S-1
|
|
Specific Terms of each Note Will Be Described in the Applicable Pricing Supplement
|
S-2
|
|
What Are Some of the Risks of the Notes?
|
S-2
|
|
What Are the Tax Consequences of the Notes?
|
S-3
|
|
Risk Factors
|
S-5
|
|
Risks Related to Certain Features of the Notes
|
S-6
|
|
Risks Related to Liquidity and Secondary Market Issues
|
S-13
|
|
Risks Related to General Characteristics of Reference Assets and Reference Baskets
|
S-14
|
|
Hedging Activities and Conflicts of Interest
|
S-15
|
|
Risks related to taxation issues
|
S-17
|
|
General Terms of the Notes
|
S-18
|
|
Denomination
|
S-18
|
|
Payment at Maturity
|
S-18
|
|
Interest
|
S-18
|
|
Original Issue Discount
|
S-18
|
|
Issue Price and Variable Price Offer
|
S-18
|
|
Interest Payment Dates
|
S-19
|
|
Interest Reset Dates
|
S-19
|
|
Maturity Date
|
S-19
|
|
Reissuances or Reopened Issues
|
S-19
|
|
Business Days
|
S-19
|
|
Business Day Conventions
|
S-20
|
|
Regular Record Dates for Interest
|
S-21
|
|
Redemption Price Upon Optional Tax Redemption
|
S-21
|
|
Default Amount on Acceleration
|
S-21
|
|
Default Amount
|
S-21
|
|
Default Quotation Period
|
S-21
|
|
Qualified Financial Institutions
|
S-22
|
|
Manner of Payment
|
S-22
|
|
Role of Calculation Agent
|
S-22
|
|
Booking Branch
|
S-22
|
|
Currency of Notes
|
S-22
|
|
Interest Rate Mechanics
|
S-23
|
|
Fixed Rate Notes
|
S-23
|
|
Floating Rate Notes
|
S-23
|
|
Day Count Conventions
|
S-24
|
|
Certain Features of the Notes
|
S-27
|
|
Fixed-to-Floating Rate
|
S-27
|
|
Rate Cut-off
|
S-27
|
|
Floating Rate Conversion Notes
|
S-27
|
|
Step Up and Step Down Notes
|
S-27
|
|
Bull Notes
|
S-28
|
|
Digital Notes
|
S-28
|
|
Inverse Floating Rates
|
S-28
|
|
Maximum Return, Maximum Rate, Ceiling or Cap
|
S-28
|
|
Minimum Rate or Floor
|
S-29
|
|
Spread
|
S-29
|
|
Multiplier
|
S-29
|
|
Ranges or Range Accruals
|
S-29
|
|
Initial Level
|
S-29
|
|
Final Level
|
S-29
|
|
Issuer Fee
|
S-29
|
|
Reference Equity Indices linked Notes
|
S-29
|
|
Autocallable Notes
|
S-30
|
|
Reference Assets
|
S-32
|
|
CMS Rate (USD)
|
S-32
|
|
CMT Rate
|
S-33
|
|
Consumer Price Index (CPI)
|
S-35
|
|
EURIBOR
|
S-36
|
|
Federal Funds (Effective) Rate
|
S-37
|
|
Federal Funds (Open) Rate
|
S-38
|
|
LIBOR
|
S-38
|
|
Prime Rate
|
S-39
|
|
Special Rate Calculation Terms
|
S-40
|
|
Reference Equity Indices
|
S-41
|
|
Use of Proceeds and Hedging
|
S-45
|
|
Material U.S. Federal Income Tax Consequences
|
S-46
|
|
Certain ERISA Considerations
|
S-61
|
|
Supplemental Plan of Distribution (Conflicts of
Interest)
|
S-62
|
Prospectus
|
Introduction
|
1
|
|
Cautionary Note Regarding Forward-Looking Statements
|
3
|
|
Incorporation of Information About UBS AG
|
4
|
|
Where You Can Find More Information
|
5
|
|
Presentation of Financial Information
|
6
|
|
Limitations on Enforcement of U.S. Laws Against UBS, Its Management and Others
|
6
|
|
UBS
|
7
|
|
Swiss Regulatory Powers
|
10
|
|
Use of Proceeds
|
11
|
|
Description of Debt Securities We May Offer
|
12
|
|
Description of Warrants We May Offer
|
32
|
|
Legal Ownership and Book-Entry Issuance
|
47
|
|
Considerations Relating to Indexed Securities
|
52
|
|
Considerations Relating to Securities Denominated or Payable in or Linked to a Non-U.S. Dollar Currency
|
55
|
|
U.S. Tax Considerations
|
58
|
|
Tax Considerations Under the Laws of Switzerland
|
69
|
|
Benefit Plan Investor Considerations
|
71
|
|
Plan of Distribution
|
73
|
|
Conflicts of Interest
|
75
|
|
Validity of the Securities
|
76
|
|
Experts
|
76
|
$
UBS AG Callable Step-Up Notes
due June 23, 2027
Preliminary Pricing Supplement dated
June 1, 2020
(To Prospectus Supplement dated October 31, 2018
and Prospectus dated October 31, 2018)
UBS Investment Bank
UBS Securities LLC
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