CIBC is issuing 8 million preferred shares to raise $200 million, the bank announced on Monday.

The company has entered into an agreement with a group of underwriters led by CIBC World Markets Inc. for the issue of non-cumulative rate reset Class A Preferred Shares, Series 35. The shares will be offered at $25.00 each.

The underwriters also have an option to purchase an additional 3 million shares at the same price, which would bring the total gross proceeds of the offering to $275 million.

The shares will yield 6.5% per annum, payable quarterly when declared by the CIBC board of directors, for an initial period ending April 30, 2014. The dividend rate will then reset every five years to be equal to the then current five-year Government of Canada bond yield plus 4.47%.

Holders of the series 35 shares will have the right to convert their shares into non-cumulative floating rate Class A Preferred Shares, Series 36 subject to certain conditions, on April 30, 2014 and on April 30 every five years thereafter. Holders of the series 36 shares will be entitled to receive a quarterly floating rate dividend, when declared, equal to the three-month Government of Canada Treasury Bill yield plus 4.47%.

The expected closing date of the offering is Feb. 4. The net proceeds of this offering will be used for general purposes of CIBC, the bank said.

CIBC is the latest Canadian bank to issue preferred shares to raise capital.

Last Thursday, Toronto-Dominion Bank announced a $200 million issue of preferred shares and National Bank of Canada announced a $100 million issue.

The day before that, Royal Bank of Canada and Bank of Nova Scotia each announced preferred share issues.

IE