By Andrew Willis (Globe & Mail Streetwise):
Add CIBC to the long list of Canadian banks that have bulked up their balance sheets with hybrid securities.
CIBC sold $1.6-billion of what's known as Tier 1 hybrid securities, its first foray into this market. Rival Bank of Montreal tapped this market for $450-million in December. This offering looks a lot like debt from an investor's point of view, and is sold as a source of income, but counts as equity for regulatory purposes.
CIBC set aside $100-million of the issue for retail clients – upsizing that allocation from $50-million. The issue came in the wake of stronger-than-expected quaterly earnings from the bank.The new offering, led by CIBC World Markets, came in two flavours. There was $1.3-billion of securities with a 9.976 per cent yield, a 695-basis-point premium to the comparable government bond, and $300-million with a 10.25 per cent coupon. Both issues can be called by the bank in 2019.