CIBC (TSX: CM) (NYSE: CM) has announced a public offering in the United States of US$500 million of 6.750% Fixed Rate Reset Limited Recourse Capital Notes Series 10 (Non-Viability Contingent Capital (NVCC)) (Subordinated Indebtedness), referred to as the LRCNs. The offering is set to close on July 13, 2026, according to a press release from the bank.
Interest Rate and Maturity Details
The LRCNs will bear interest at a rate of 6.750% annually, payable quarterly, for the initial period ending on January 28, 2032. Thereafter, the interest rate will reset every five years at a rate equal to the prevailing 5-year U.S. Treasury Rate plus 2.499%. The notes will mature on January 28, 2087.
Structure and Recourse Limitations
In connection with the issuance, CIBC will issue Non-Cumulative 5-Year Fixed Rate Reset Class A Preferred Shares Series 65 (Non-Viability Contingent Capital (NVCC)) to be held by Computershare Trust Company of Canada as trustee of CIBC LRCN Limited Recourse Trust. In case of non-payment, recourse of each LRCN holder is limited to their proportionate share of the trust's assets, which consist of Series 65 Shares except in limited circumstances.
Redemption and Use of Proceeds
CIBC may redeem the LRCNs on January 28, 2032, and quarterly thereafter, with prior written approval from the Superintendent of Financial Institutions (Canada), on not less than 10 nor more than 60 days' notice. Net proceeds will be used for general corporate purposes, including potential redemption of outstanding capital securities or repayment of other liabilities.
Underwriters and Regulatory Filing
The joint book-running managers for the offering are CIBC World Markets Corp., Barclays Capital Inc., Citigroup Global Markets Inc., Morgan Stanley & Co. LLC, Wells Fargo Securities, LLC, Credit Agricole Securities (USA) Inc., and Mizuho Securities USA LLC. A registration statement has been filed with the U.S. Securities and Exchange Commission (SEC) and is effective. The offering is made only by prospectus supplement and base prospectus, available free on EDGAR at www.sec.gov or by contacting the underwriters.
