Moody's rates CIBC debt Baa1

Moody's Investors Service said it assigned a Baa1 (hyb) rating to the C$1 billion Basel III compliant non-viability contingent capital subordinated debt of Canadian Imperial Bank of Commerce (Aa3/negative).

Proceeds will be used for general corporate purposes.

The debt provides loss absorption as it is subject to automatic conversion into common shares, based on a predetermined conversion formula, at the point of non-viability, as defined by the Office of the Superintendent of Financial Institutions Canada, subject to regulatory discretion. The agency said this incremental loss-absorption feature is credit positive for holders of senior securities of CIBC, as a layer of loss-absorbing securities will reduce the risk of losses incurred higher in the capital hierarchy if the bank gets into financial distress.

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