CIBC announces new LRCN offering

CIBC is issuing $750 million in limited recourse capital notes (LRCNs) with a fixed interest rate of 4.0% annually.

After Jan. 28, 2027, the interest rate will reset every five years at the five-year Government of Canada yield plus 3.102%, the bank said in a Wednesday release.

The notes will be sold through a dealer syndicate led by CIBC Capital Markets and will mature on Jan. 28, 2082.

CIBC may redeem the LRCNs from Dec. 28 to Jan. 28, commencing in 2026 and every five years thereafter. The bank will use the proceeds generated from the LRCNs for general banking purposes.

The expected closing date of the offering is Sept. 14.

LRCNs launched in July 2020, aimed at institutional investors. With their 60-year terms, LRCNs offer good yields and attractive features for issuers, acting as bond substitutes and shock absorbers. Banks and insurance companies can now issue LRCNs. In August, Great-West Lifeco Inc. issued $1.5 billion in LRCNs with an annual fixed rate of 3.6%, matching the rate offered by Toronto-Dominion Bank in its July release.

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