UBS Group AG has begun the sale of hotly-anticipated additional tier 1 bonds, marking its first issuance of the securities since Credit Suisse’s writedown of about $17 billion of the debt.

The bank is offering two dollar-denominated perpetual tranches callable in five and 10 years, according to a person familiar with the matter, who asked not to be identified because they’re not authorized to speak about it. Initial price discussions are at about 10% for the shorter tranche and around 10.125% for the longer one. The deal may price today.

In total, the two tranches may amount to $3 billion, according to two separate people with knowledge of the matter. A UBS representative confirmed that the bank is selling AT1s but declined to comment further.

The new issuance will bolster UBS’s AT1 capital layer — an important buffer that helps banks comply with core capital requirements without relying solely on more expensive equity. The lender recently called a S$700 million ($519 million) bond and it also has a $2.5 billion note that reaches its first early repayment date in January, based on data compiled by Bloomberg.

The new notes have an attractive yield, with UBS’s existing dollar AT1s offering an average of about 9.6% until their next call date, based on data compiled by Bloomberg. They also contain a mechanism that would allow the bonds to be converted into ordinary shares once the bank’s articles of association are amended to provide enough conversion capital.

“It looks cheap to peers and in my opinion will be significantly oversubscribed,” said Laurent Frings, head of credit research at Aegon Asset Management. The equity conversion mechanism — likely a response to the Credit Suisse drama — is also positive, he said.

“In terms of optics and the likelihood of seeing another trigger happening and shareholders getting something versus AT1 holders getting zero, this is definitely better,” he said.

The March wipeout of Credit Suisse’s AT1s as part of the UBS rescue deal shook the market, causing the biggest daily slump in the history of the asset class. A last-minute tweak to Swiss law allowed the writedown to go ahead even as Credit Suisse shareholders managed to preserve some value in the deal. A so-called Swiss penalty in the AT1 market lasted for several months, with yields soaring over non-Swiss peers as investors sought clarity on how Switzerland’s regulators would treat the securities in future.

Read more: Call Them AT1s or CoCos, Here’s Why They Can Blow Up: QuickTake

But the market has made something of a comeback since, with even UBS AT1s recovering. Major banks have continued to call their bonds and issuance restarted with the first euro-denominated offerings in June. BNP Paribas SA was the first European bank since the collapse to sell an AT1 in dollars. It tweaked the terms of the notes so that they’d convert to shares rather than be written down if its capital ratio falls below a certain level.

The UBS issuance is “an attempt to restore confidence in the market regarding these instruments, notwithstanding technicalities with the writedown and Swiss-specific language,” said Ugo Lagrotta, a treasury asset and liability management advisor who worked at UBS until last year.

“I am convinced that going forward, there will be better alignment between jurisdictions in the industry. I would not expect to see another event like the one we witnessed in March,” he said.

The deal follows well-received results from UBS on Tuesday, with the lender reporting stronger-than-expected client inflows in its wealth-management business, boosted by the first signs of stabilization at Credit Suisse.

What Bloomberg Intelligence Says...

“UBS’ proposed dollar PerpNC5 (initial price talk 10%) and PerpNC10 (initial price talk 10.125%) two-tranche Additional Tier 1 bond could make the call of the existing dollar 7% ($2.5 billion outstanding) at end-January more likely. This would be the first benchmark AT1 issuance by a Swiss bank since the permanent write-down of the Credit Suisse AT1s in March. The new AT1 has permanent write-down language until the bank’s articles of association have been amended to allow for equity conversion.”

— Jeroen Julius, Senior Credit Analyst

--With assistance from Hannah Benjamin-Cook.

(Updates with deal size in third paragraph, more context throughout.)