And now there are nine. One more and I’ve got to get cracking with a – thankfully, rather minor – HIMIPref™ upgrade to put them in the database.
CM has announced:
it had entered into an agreement with a group of underwriters led by CIBC World Markets Inc. for an issue of 9 million non-cumulative Rate Reset Class A Preferred Shares, Series 33 (the “Series 33 Shares”) priced at $25.00 per Series 33 Share to raise gross proceeds of $225 million.
CIBC has granted the underwriters an option, exercisable in whole or in part prior to closing, to purchase an additional 3 million Series 33 Shares at the same offering price. Should the underwriters’ option be fully exercised, the total gross proceeds of the financing will be $300 million.
The Series 33 Shares will yield 5.35% per annum, payable quarterly, as and when declared by the Board of Directors of CIBC, for an initial period ending July 31, 2014. On July 31, 2014 and on July 31 every five years thereafter, the dividend rate will reset to be equal to the then current five-year Government of Canada bond yield plus 2.18%.
Holders of the Series 33 Shares will have the right to convert their shares into non-cumulative Floating Rate Class A Preferred Shares, Series 34 (the “Series 34 Shares”), subject to certain conditions, on July 31, 2014 and on July 31 every five years thereafter. Holders of the Series 34 Shares will be entitled to receive a quarterly floating rate dividend, as and when declared by the Board of Directors of CIBC, equal to the three-month Government of Canada Treasury Bill yield plus 2.18%.
Holders of the Series 34 Shares may convert their Series 34 Shares into Series 33 Shares, subject to certain conditions, on July 31, 2019 and on July 31 every five years thereafter.
The expected closing date is September 10, 2008. The net proceeds of this offering will be used for general purposes of CIBC.
Issue: Canadian Imperial Bank of Commerce Non-Cumulative Rate Reset Class A Preferred Shares, Series 33
Size: 9-million shares (=$225-million), greenshoe for 3-million shares (=$75-million) exercisable before closing.
Initial Dividend: 5.35% p.a., paid quarterly, until the first Exchange Date
Subsequent Dividends: 5-year Canadas +218bp, reset on Exchange Dates
Exchange Date: July 31, 2014 and every five years thereafter.
Exchange Option: Exchangeable to and from Series 34, which pays 3-month bills + 218bp, on Exchange Dates, reset quarterly.
Redemption: Series 33 (5-year-rate) redeemable every Exchange Date at $25.00. Series 34 (floater) is redeemable every Exchange Date at $25.00 and at all other times at $25.50.
It is interesting that the spread to the BNS new issue announced yesterday is 35bp for the initial period and 30bp thereafter. There are currently seven CM perpetualDiscounts, trading to yield between 6.43% and 6.68% at their bids; there are six BNS perpetualDiscounts, trading to yield between 5.73% and 5.90% at their bids. So the spread for seasoned issues is about 70bp, roughly double the spread on new issues. Live and learn.
CM announced this issue immediately after their 3Q08 Earnings Release … this is getting to be a habit!
I have written an article on the analysis of Fixed-Resets.
Update, 2014-05-06: Trades as CM.PR.K