UBS today announced that it has closed on the sale of approximately US$15 billion of residential mortgage-backed securities to a newly created distressed asset fund that will be managed by the global investment management firm BlackRock.

The bank reports that the positions have a nominal value of approximately US$22 billion. The new fund is picking them up for an aggregate sale price of approximately US$15 billion. Based on UBS categorizations, the vast majority of the positions are sub-prime and Alt-A in roughly equal parts, and the remainder is prime.

The fund purchased the securities using approximately US$3.75 billion in equity raised by BlackRock from investors and a multi-year collateralized term loan of approximately US$11.25 billion provided by UBS.

Marcel Rohner, group CEO of UBS said, “Risk reduction remains a critical part of our ongoing financial restructuring and this sale is a big step towards further reducing our positions in this asset class. We continue to manage our legacy risks in a flexible and creative way in the best interests of our shareholders.”