PrefBlog

Canadian Imperial Bank of Commerce has announced:

a domestic public offering of $500 million of 6.987% Limited Recourse Capital Notes Series 4 (Non-Viability Contingent Capital (NVCC)) (Subordinated Indebtedness) (the “LRCNs”). The LRCNs will be sold through a dealer syndicate led by CIBC Capital Markets.

The LRCNs will bear interest at a rate of 6.987% annually, payable semi-annually, for the initial period ending on, but excluding, July 28, 2029. Thereafter, the interest rate on the LRCNs will reset every five years at a rate equal to the prevailing 5-year Government of Canada Yield plus 3.70%. The LRCNs will mature on July 28, 2084. The expected closing date of the offering is June 25, 2024.

In connection with the issuance of the LRCNs, CIBC will issue Non-Cumulative 5-Year Fixed Rate Reset Class A Preferred Shares Series 58 (Non-Viability Contingent Capital (NVCC)) (the “Series 58 Shares”) to be held by Computershare Trust Company of Canada as trustee of CIBC LRCN Limited Recourse Trust (the “Limited Recourse Trust”). In case of non-payment of interest on or principal of the LRCNs when due, the recourse of each LRCN holder will be limited to that holder’s proportionate share of the Limited Recourse Trust’s assets held in respect of the LRCNs, which will consist of Series 58 Shares except in limited circumstances.

CIBC may redeem the LRCNs during the period from June 28 to and including July 28, commencing on June 28, 2029 and every five years thereafter with the prior written approval of the Superintendent of Financial Institutions Canada, in whole or in part on not less than 10 nor more than 60 days’ prior notice.

The net proceeds to CIBC from the sale of the LRCNs will be used for general corporate purposes, which may include the redemption of outstanding capital securities of CIBC, and/or the repayment of other outstanding liabilities of CIBC.

The LRCNs will be offered by way of a prospectus supplement to the bank’s short form base shelf prospectus dated September 23, 2022, to be filed on or about June 19, 2024 with the securities commissions and other similar regulatory authorities in each of the provinces and territories of Canada.

Access to the prospectus supplement, the corresponding base shelf prospectus and any amendment thereto in connection with this offering is provided in accordance with securities legislation relating to procedures for providing access to a shelf prospectus supplement, a base shelf prospectus and any amendment thereto. The prospectus supplement, the base shelf prospectus and any amendment thereto in connection with this offering will be accessible within two business days at www.sedarplus.com.

An electronic or paper copy of the shelf prospectus supplement, the corresponding base shelf prospectus and any amendment to the documents may be obtained, without charge, from CIBC World Markets Inc., by contacting 416-594-8515 or email at Mailbox.CIBCDebtSyndication@cibc.com, by providing the contact with an email address or address, as applicable.

This came as pleasant news to holders of CM.PR.O, scheduled to reset at +232 effective 2024-7-31: it closed today at 24.88, up 2.77% from yesterday’s close. Market reaction for CM.PR.Y, scheduled to reset at +362 on 2024-7-31, was much more restrained: it closed at 25.10, up 0.32%; but, of course, with an Issue Reset Spread of +362, redemption has been considered pretty likely for a while.

In either case, it isn’t over until the fat lady sings, so don’t nobody go mortgaging any farms to try and squeeze a nickel out of the potential for redemption!

Thanks to Assiduous Readers IrateAR and niagara for bringing this to my attention!

This entry was posted on Tuesday, June 18th, 2024 at 10:46 pm and is filed under Issue Comments. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.