CM Preferreds Downgraded by S&P

Standard and Poor’s has announced:

  • •We believe that the Canadian banking sector is encountering incremental pressure from headwinds facing the Canadian economy, which is heightening
    economic risk in the banking system.
  • •We also believe that industry risk for the Canadian banking sector is
    increasing. We expect that intensifying competition for loans and deposits will lead to pressure on profitability growth, especially in banks’ retail businesses.
  • •We are affirming our ‘A+/A-1’ long- and short-term issuer credit ratings
    on CIBC, as well as the ‘A+’ issue rating on CIBC’s senior unsecured debt. We are lowering our issue rating on CIBC’s nondeferrable subordinated debt to ‘BBB+’ from ‘A-‘, and our rating on its preferred shares and hybrids to ‘BBB’ from ‘BBB+’.
  • •The stable outlook reflects our expectation that the bank’s credit fundamentals will remain consistent with its current ratings over the next 24 months.

It is our view that CIBC is a “systemically important” bank and that it would likely benefit from extraordinary government support in times of stress.

This results in the CM PerpetualPremiums, CM.PR.D (Series 26) and CM.PR.E (Series 27) being downgraded from P-2 to P-2(low). CM.PR.G (Series 29) can be taken as equivalent although it is not rated by S&P, oddly enough. These are the issues which have been recognized by OSFI has having a good enough NVCC clause.

CM’s other three issues outstanding are CM.PR.K (Series 33), CM.PR.L (Series 35) and CM.PR.M (Series 37), have been downgraged to P-2 from P-2(high)

2 Responses to “CM Preferreds Downgraded by S&P”

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