Commonwealth Bank last week outlined plans for a new issue of contingent convertible notes (a form of additional tier one capital, known as CoCos) and its intention to use the familiar CBA label of PERLS VIII. These may replace the PERLS III hybrids notionally due to be called in April.This may be good news for the holders of PERLS III - who are expecting the notes to be called - but CBA left itself an out, saying the new issue would be subject to market conditions.  The announcement brings to life the question of how much the CBA will be prepared to pay in terms of the credit margin set on the PERLS VIII notes, to meet complex market conditions. CBA did not provide any further details of what it has in mind for a PERLS VIII issue and didn't give any indication of when more information may be forthcoming. However, the price of the PERLS VII notes (the most recent CBA hybrid) dropped on Wednesday last week to A$86.82, from $87.25.Dropping below $87 takes the price of the PERLS VII notes very close to their lowest point yet and gives a yield to call in December 2022 of 7.99 per cent. At this level the trading margin (the spread over the applicable swap rate) is 561 basis points.The is well above what lower rated AMP and Macquarie Group had to offer to get their additional tier one capital raisings away last December, at 510 bps and 515 bps respectively. It is also well above the 280 bps that CBA paid on the PERLS VII, last time that it came to the market.But market conditions have deteriorated in the meantime.Even since the end of December, the average price of tier one capital listed on the ASX has dropped by $1.06, with the average yield to call increasing by 35 bps to 7.44 per cent.At the moment, CBA is facing the prospect of having to offer a credit spread that will be at least twice the credit spread paid on the PERLS VII, assuming the call date set for the PERLS VIII matches or exceeds that of the PERLS VII.  But a new issue premium will have to be paid, the perceptions of PERLS VII investors who feel they have had their fingers burnt will have to dealt with, and comparisons will be made with the yield currently on offer on CBA shares.At the close on Wednesday, after the bank released its interim results, the shares were trading on a prospective yield of 8.1 per cent per annum, after allowing for the value of the franking credits. Interestingly, at this level, any new issue premium offered by CBA could actually see the yield to call on the PERLS VIII exceed the gross dividend yield on CBA shares, provided the share price holds at current levels ($74.20).  And if market conditions are deemed to be unfavourable, will the bank call the PERLS III in April or will it set a precedent and not call?With less