Canadian Imperial Bank of Commerce has announced:
the dividend rates applicable to its Non-cumulative Rate Reset Class A Preferred Shares Series 47 (Non-Viability Contingent Capital (NVCC)) (the “Series 47 Shares”) and Non-cumulative Floating Rate Class A Preferred Shares Series 48 (Non-Viability Contingent Capital (NVCC)) (the “Series 48 Shares”).
The fixed dividend rate applicable to the Series 47 Shares, should any remain outstanding after January 31, 2023, for the five-year period from and including January 31, 2023 to but excluding January 31, 2028 is 5.878%, payable quarterly as and when declared by the Board of Directors of CIBC.
The floating dividend rate applicable to the Series 48 Shares, should any be issued, for the three-month period from and including January 31, 2023 to but excluding April 30, 2023 is 6.753%, payable for the period as defined as and when declared by the Board of Directors of CIBC. CIBC has designated the Series 48 Shares as eligible to participate in the CIBC Shareholder Investment Plan.
Beneficial owners of Series 47 Shares who wish to exercise their conversion right should instruct their broker or other nominee to exercise such right during the conversion period, which runs from January 1, 2023 until 5:00 p.m. (Eastern Standard Time) on January 16, 2023. Any notices received after this deadline will not be valid.
CM.PR.S was issued as a FixedReset, 4.50%+245, NVCC-compliant, that commenced trading 2018-1-18 after being announced January 10. Notice of extension was provided 2022-12-15. The issue is tracked by HIMIPref™ and is assigned to the FixedReset (Discount) subindex.
I have received a mildly irate eMail from Assiduous Reader PG:
Has CIBC jumped the gun with today’s rate announcement for CM.PR.S?
As per the Prospectus, the “Fixed Rate Calculation Date” for any “Subsequent Fixed Rate Period” is the 30th day prior to the first day of such Subsequent Fixed Rate Period. The latter term, in this case, refers to the five-year period from and including January 31, 2023.
Thirty days prior to January 31 obviously falls on Sunday, January 1.
The CIBC Prospectus for CM.PR.S does NOT have the usual “Business Day” provision found in so many other Prospectuses and which would have any action to be taken fall on the next business day.
I realize CIBC went on record as choosing December 30, but do they have that discretion?
Well, it’s true. The CM.PR.S prospectus provides the usual definition of the “Fixed Rate Calculation Date”, but does not specify what is to happen if this date is not a business day; and this, presumably, played a role in CIBC’s decision to specify the actual date in their notice of extension.
I agree that it’s better to have these things specified in the prospectus, but I think CIBC acted responsibly in providing two week’s notice of the actual date. Careless errors with calculation dates became an issue in the 2019 reset of HSE.PR.C and in the 2019 reset of AZP.PR.B. All I can say is that if this sort of thing is important to investors, then they should check the prospectus in advance of any purchase.
Thanks to Assiduous Reader niagara for bringing this to my attention and to to CanSiamCyp for the follow -up.
” …if this sort of thing is important to investors, then they should check the prospectus in advance of any purchase.”
Yes, and if the Prospectus is silent on what happens when the reset date calculation falls on a holiday, then usual commercial practice would point to the next available business day. The fact that CIBC provided two weeks’ notice of a different approach simply begs the question.
CIBC also did not use Friday’s 5-year GOC as of 10 a.m. but chose the (lower) closing price as of 1 p.m.
I find it all a bit “loose”. I suppose practically speaking no Assiduous Reader will complain if Tuesday’s GOC rate is unchanged ( or lower) but that’s not the point. And what if it jumps 2-3%?