The Trigger PLUS are unsecured debt obligations of Canadian Imperial Bank of Commerce (CIBC) that offer leveraged exposure to the upside performance of the EURO STOXX 50® Index, with a trigger mechanism providing limited principal protection. The securities pay no interest and do not guarantee principal repayment at maturity.
Key Features:
- Maturity: 6 years
- Leverage Factor: At least 197.00% (determined on the Pricing Date)
- Trigger Level: 65% of the Initial Index Value
- Minimum Payment at Maturity: None (investors could lose their entire initial investment)
Payoff Scenarios:
- Upside Scenario: If the Final Index Value is greater than the Initial Index Value, investors receive the $1,000 Stated Principal Amount plus 197.00% of the Index appreciation.
- Par Scenario: If the Final Index Value is between the Initial Index Value and the Trigger Level, investors receive the $1,000 Stated Principal Amount.
- Downside Scenario: If the Final Index Value is below the Trigger Level, investors receive significantly less than the $1,000 Stated Principal Amount, with a 1% loss of principal for each 1% decline in the Index.
Risks:
- Principal at Risk: The Trigger PLUS do not pay interest or guarantee principal repayment, and investors could lose their entire investment if the Index value declines significantly.
- Lack of Index Linkage: The payment amount is only linked to the Index value at the Valuation Date, not at any other time, potentially resulting in lower returns than expected.
- Long-Dated Security: The longer-term nature of the securities increases risks associated with market fluctuations and credit risk.
- Foreign Market Risks: The underlying Index includes foreign companies, exposing investors to risks associated with foreign securities markets, including lower liquidity, higher volatility, and political and economic uncertainties.
- Regulatory Risks: Governmental regulatory actions, such as sanctions, could adversely affect the value of the securities.
- Index Adjustments: Changes to the underlying Index, such as additions, deletions, or substitutions of stocks, could impact the value of the Trigger PLUS.
- Conflicts of Interest: Potential conflicts of interest exist between CIBC and its affiliates, as well as between investors and the calculation agent, due to various trading, hedging, and research activities.
- Credit Risk: Payments on the Trigger PLUS are subject to CIBC's credit risk, and a default could result in the loss of investment.
- Market Risk: Economic and market factors, including changes in interest rates, geopolitical events, and CIBC's creditworthiness, could affect the terms and market price of the securities before maturity.
- Lack of Secondary Market: The Trigger PLUS will not be listed on any securities exchange, and a secondary market may not develop, limiting liquidity and potential resale options.
- Tax Risks: The tax treatment of the Trigger PLUS is uncertain, and investors should consult with their tax advisors.
CIBC's Estimated Value: The Bank's initial estimated value of the Trigger PLUS is expected to be between $900 and $920 per Trigger PLUS, which is lower than the initial issue price due to costs associated with selling, structuring, and hedging the securities.
Conclusion:
The Trigger PLUS offer investors leveraged exposure to the upside performance of the EURO STOXX 50® Index, but with significant risks, including the potential loss of principal. Investors should carefully consider the risks and their own investment objectives before investing in these securities.
