DBRS Morningstar Finalizes Its Provisional Rating on Canadian Imperial Bank of Commerce’s NVCC Additional Tier 1 (AT1) Limited Recourse Capital Notes Series 1 at BBB (high) with a Stable Trend

DBRS Limited (DBRS Morningstar) finalized its provisional rating of BBB (high) with a Stable trend on Canadian Imperial Bank of Commerce’s (CIBC or the Bank) NVCC Additional Tier 1 (AT1) Limited Recourse Capital Notes Series 1 (the Capital Notes).

Following the review of documentation associated with the recent offering, DBRS Morningstar confirmed that the terms of the issuance are consistent with those reviewed at the time the provisional rating was assigned on September 9, 2020. For further details on the provisional rating, please see the DBRS Morningstar press release entitled “DBRS Morningstar Assigns a Provisional Rating to Canadian Imperial Bank of Commerce’s NVCC Limited Recourse Capital Notes Series 1 of BBB (high) with a Stable Trend.”

On September 9, 2020, the Bank issued $750 million of Capital Notes that mature on October 28, 2080, and will have an initial five-year fixed rate of 4.375%. DBRS Morningstar notes that the Office of the Superintendent of Financial Institutions granted Tier 1 capital treatment to the Capital Notes.

RATING DRIVERS
Given the current environment, DBRS Morningstar views an upgrade of CIBC’s ratings as unlikely. Conversely, DBRS Morningstar would downgrade CIBC’s ratings if there is a material deterioration in the Bank's asset quality or a prolonged adverse impact from the Coronavirus Disease (COVID-19) pandemic, which would have a significant effect on CIBC's financial performance.

ESG CONSIDERATIONS
A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework and its methodologies can be found at: https://www.dbrsmorningstar.com/research/357792.

The Grid Summary Grades for CIBC are as follows: Franchise Strength – Very Strong/Strong; Earnings Power – Strong; Risk Profile – Strong; Funding & Liquidity – Strong; Capitalization – Strong.

Notes:
All figures are in Canadian dollars unless otherwise noted.

The principal methodology is the Global Methodology for Rating Banks and Banking Organisations (June 8, 2020; https://www.dbrsmorningstar.com/research/362170/global-methodology-for-rating-banks-and-banking-organisations)

For more information regarding rating methodologies and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/357883.

The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found on the issuer page at www.dbrsmorningstar.com.

The rated entity or its related entities did participate in the rating process for this rating action. DBRS Morningstar had access to the accounts and other relevant internal documents of the rated entity or its related entities in connection with this rating action.

This rating is endorsed by DBRS Ratings Limited (DBRS Morningstar) for use in the European Union. The following additional regulatory disclosures apply to endorsed ratings:

The last rating action on this issuer took place on September 9, 2020, when DBRS Morningstar assigned a provisional rating of BBB (high) with a Stable trend to the Capital Notes.

Generally, the conditions that lead to the assignment of a Negative or Positive trend are generally resolved within a 12-month period. DBRS Morningstar’s outlooks and ratings are monitored.

For further information on DBRS Morningstar historical default rates published by the European Securities and Markets Authority (ESMA) in a central repository, see: http://cerep.esma.europa.eu/cerep-web/statistics/defaults.xhtml.

Lead Analyst: Robert Colangelo, Senior Vice President
Rating Committee Chair: Michael Driscoll, Managing Director
Initial Rating Date: December 31, 1980

For more information on this credit or on this industry, visit www.dbrsmorningstar.com.

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