The Toronto-Dominion Bank (TD) is offering Callable Contingent Interest Barrier Notes linked to the least performing of the Nasdaq-100® Technology Sector IndexSM, the Russell 2000® Index, and the S&P 500® Index. The Notes will pay a 12.75% contingent interest rate only if the closing value of each reference asset is greater than or equal to its 70.00% initial value. If any reference asset falls below its barrier value, no interest payment will be made.
Key Features and Risks:
- Contingent Interest Payment: The Notes pay a 12.75% contingent interest rate, but only if the closing value of each reference asset meets its barrier value. If any asset falls below the barrier value, no interest payment will be made.
- Issuer Call Option: TD may call the Notes in whole on any monthly call payment date (starting from the third contingent interest payment date) with at least three business days' notice, regardless of the reference asset values.
- Maturity Payment: If TD does not call the Notes, the maturity payment will depend on the final value of the reference assets relative to their barrier values:
- If all reference assets are above their barrier values, the payment will be the principal amount of $1,000.
- If any reference asset is below its barrier value, the payment will be $1,000 plus the product of $1,000 and the least performing percentage change.
- Potential Losses: Investors may lose up to their entire investment if the least performing reference asset's final value is below its barrier value.
- Market Risks: The Notes are subject to market risks associated with each reference asset. Poor performance of any single asset will negatively impact the investor's return.
- Liquidity Risks: The Notes are not listed, and there may be little or no secondary market, potentially leading to significant losses if the Notes need to be sold before maturity.
- Taxation: The U.S. tax treatment of the Notes is uncertain, and potential conflicts of interest exist due to TD's role as the calculation agent and its potential hedging activities.
Additional Information:
- The estimated value of the Notes at the pricing date is expected to be between $940.00 and $975.00 per Note, lower than the public offering price.
- The Notes are subject to risks associated with the technology sector and small-cap companies.
- The estimated value is based on TD's internal funding rate and pricing models, which may differ from other financial institutions.
- U.S. holders may face additional tax considerations, including potential ordinary income treatment and Medicare tax on net investment income.
- TD reserves the right to change the terms of the Notes or reject offers prior to issuance.
Conclusion:
Investors should be aware of the high risks associated with these Notes, including the potential for loss of principal, limited liquidity, and uncertain tax treatment. The Notes are complex instruments that do not provide guaranteed returns and are linked to the performance of individual reference assets, making them more vulnerable to market fluctuations than traditional debt securities.
