CIBC Sells Negative-Yield Bonds for 1st Time

Bank sells 1.25 billion euros worth of debt guaranteed to lose money in long run

by Pete Evans

Canadian Imperial Bank of Commerce has become the first Canadian bank to sell bonds with a negative yield, and it had no problem selling the debt even though buyers are guaranteed to lose money if the debt is held to maturity.

The bank raised almost $1.8 billion via a bond sale of six-year debt that yields minus 0.009 per cent. That means anyone who bought the debt paid $100.054 for the right to get $100 back from the bank in 2022.

Despite the seemingly poor return, the bank had no trouble selling the euro-denominated bonds on Monday. The bond sale was two times oversubscribed, which means there were people willing to buy twice as much debt as there was debt available for sale.

Continue Reading at…