Canadian Imperial Bank of Commerce is readying a sale of as much as $1 billion of additional tier-one bonds , according to people familiar with the matter.
The bonds, known as limited recourse capital notes, will mature in about 60 years, and the bank will have the option to buy them back after five years. The notes are a type of loss-absorbing bonds that can convert to equity during distress. The size of the bond will likely range from $750 million to $1 billion, said the people, who asked not to be identified as they aren’t authorized to speak publicly.
Initial pricing on the CIBC notes are discussed in the are of three percentage points above government benchmarks, the people said. The bank announced earlier today it is considering such a sale.
A spokesperson didn’t immediately respond for a request for comment.