Investment Solutions for Municipalities
Appendix 1: Introduction Of
New Debt Structures - NVCC
& Bail-In
The Department of Finance Canada introduced new debt
structures for financial institutions, two of which have
replaced typical Canadian bank debt instruments - Non-
Viable Contingent Capital (NVCC) and the more recent
introduction of Bail-in bonds
The main attribute of these two types of securities is that
they contain a contractual clause in which they can be
converted into common equity in a scenario where a bank
is determined by The Office of the Superintendent of
Financial Institutions (OSFI) to be non-viable and in need
of additional capital
In addition, bail-in bonds will replace existing unsecured
senior debt (often referred to as deposit notes), which
currently rank senior to other forms of bank debt and are
some of the most widely held bonds by Canadian investors
Higher
Seniority
Lower
Seniority
Legacy Senior Debt
(Deposit Notes)
Bail-In Senior Debt
Tier 2
Securities
NVCC
Legacy
Sub Debt
Sub Debt
AT1
Securities
Common Equity
NVCC Preferred Shares
CIBC
CONFIDENTIAL
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