Issuer: UBS AG

.Ser 857, EUR 1.83m FIX Credit-Linked Zero Cpn Euro Medium Term Notes, Confirmed at B2; previously on Jul 2, 2012 Downgraded to B2 and Placed Under Review for Possible Downgrade.

The transaction is a credit linked note issued by UBS AG referencing the subordinated debt of Banco Bilbao Vizcaya Argentaria S.A.

RATINGS RATIONALE

Moody's explained that the rating action taken today is the result of a rating action on Banco Bilbao Vizcaya Argentaria, S.A., whose subordinate rating was confirmed at Ba1 on 24 October 2012. For further information on the underlying action see the press release titled "Moody's concludes rating reviews on majority of Spanish banks after sovereign rating confirmation" on www.moodys.com.

Moody's notes that this transaction is subject to a high level of macroeconomic uncertainty, which could negatively impact the ratings of the notes, as evidenced by 1) uncertainties of credit conditions in the general economy especially as the transaction is exposed to an obligor located in Spain and 2) more specifically, any uncertainty associated with the underlying credits in the transaction could have a direct impact on the repackaged transaction.

The principal methodology used in this rating was "Moody's Approach to Rating Repackaged Securities" published in April 2010. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.

Moody's quantitative analysis of Repacks is designed to estimate the expected loss "EL" borne by the Repack investor, given the transaction structure, the Collateral and any other credit risks arising under the transaction. To this end, Moody's relies on an EL analysis in which we identify and attach probabilities to events that might give rise to losses to Repack noteholders.

Moody's EL calculation assesses the probability and severity of each possible loss-inducing event happening at discrete (typically one-year) intervals through the life of the transaction. The EL for each of these time points can then be aggregated to provide a weighted-average EL for the rated notes.

No additional cash flow analysis have been conducted as the rating was directly derived as described above using the ratings of BBVA and UBS. Moody's also applied stresses on the default probability and severity of the BBVA subordinated debt in order to take into account the widely defined credit event definitions and deliverable obligations.

REGULATORY DISCLOSURES

The rating has been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.

Information source used to prepare the rating is the following: public information.

Moody's did not receive or take into account a third-party assessment on the due diligence performed regarding the underlying assets or financial instruments related to the monitoring of this transaction in the past six months.

Moody's considers the quality of information available on the rated entity, obligation or credit satisfactory for the purposes of issuing a rating.

Moody's adopts all necessary measures so that the information it uses in assigning a rating is of sufficient quality and from sources Moody's considers to be reliable including, when appropriate, independent third-party sources. However, Moody's is not an auditor and cannot in every instance independently verify or validate information received in the rating process.

Moody's Investors Service may have provided Ancillary or Other Permissible Service(s) to the rated entity or its related third parties within the two years preceding the credit rating action. Please see the special report "Ancillary or other permissible services provided to entities rated by MIS's EU credit rating agencies" on the ratings disclosure page on our website www.moodys.com for further information.

Please see the ratings disclosure page on www.moodys.com for general disclosure on potential conflicts of interests.

Please see the ratings disclosure page on www.moodys.com for information on (A) MCO's major shareholders (above 5%) and for (B) further information regarding certain affiliations that may exist between directors of MCO and rated entities as well as (C) the names of entities that hold ratings from MIS that have also publicly reported to the SEC an ownership interest in MCO of more than 5%. A member of the board of directors of this rated entity may also be a member of the board of directors of a shareholder of Moody's Corporation; however, Moody's has not independently verified this matter.

Please see Moody's Rating Symbols and Definitions on the Rating Process page on www.moodys.com for further information on the meaning of each rating category and the definition of default and recovery.

Please see ratings tab on the issuer/entity page on www.moodys.com for the last rating action and the rating history. The date on which some ratings were first released goes back to a time before Moody's ratings were fully digitized and accurate data may not be available. Consequently, Moody's provides a date that it believes is the most reliable and accurate based on the information that is available to it. Please see the ratings disclosure page on our website www.moodys.com for further information.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

For ratings issued on a program, series or category/class of debt, this announcement provides relevant regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides relevant regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides relevant regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

Mariona Serrat Associate Analyst Structured Finance Group Moody'sInvestors Service Ltd. One Canada SquareCanary WharfLondon E14 5FA United Kingdom JOURNALISTS: 44 20 7772 5456 SUBSCRIBERS: 44 20 7772 5454 Ian Perrin VP - Senior Credit Officer Structured Finance Group JOURNALISTS: 44 20 7772 5456 SUBSCRIBERS: 44 20 7772 5454 Releasing Office: Moody's Investors Service Ltd. One Canada SquareCanary WharfLondon E14 5FA United Kingdom JOURNALISTS: 44 20 7772 5456 SUBSCRIBERS: 44 20 7772 5454 (C) 2012 Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved.

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