The Toronto-Dominion Bank (TD) is offering Callable Contingent Interest Barrier Notes linked to the least performing of the Nasdaq-100 Index®, the Russell 2000® Index and the S&P 500® Index. The Notes have a term of approximately 57 months, subject to an Issuer Call, and a principal amount of $1,000 per Note.
Key features and terms:
- Contingent Interest Payment: The Notes will pay a Contingent Interest Payment at a rate of approximately 10.00% per annum on a Contingent Interest Payment Date, only if the Closing Value of each Reference Asset on the related Contingent Interest Observation Date is greater than or equal to its Contingent Interest Barrier Value (70.00% of its Initial Value). If the Closing Value of any Reference Asset is less than its Contingent Interest Barrier Value on a Contingent Interest Observation Date, no Contingent Interest Payment will accrue or be payable.
- Issuer Call Feature: TD may elect to call the Notes in whole on any Call Payment Date (monthly, commencing on the sixth Contingent Interest Payment Date and other than the Maturity Date) upon at least three Business Days’ prior written notice, regardless of the Closing Values of the Reference Assets. If called, TD will pay a cash payment per Note equal to the Principal Amount, plus any Contingent Interest Payment otherwise due.
- Payment at Maturity: If TD does not elect to call the Notes prior to maturity, the payment at maturity will depend on the Final Value of each Reference Asset on its Final Valuation Date relative to its Barrier Value (60.00% of its Initial Value):
- If the Final Value of each Reference Asset is greater than or equal to its Barrier Value: the Principal Amount of $1,000.
- If the Final Value of any Reference Asset is less than its Barrier Value: $1,000 plus (1) $1,000 plus (2) the product of (i) $1,000 times (ii) the Least Performing Percentage Change.
- Least Performing Percentage Change: For each Reference Asset, the Percentage Change is the quotient, expressed as a percentage, of the difference between its Final Value and its Initial Value, divided by its Initial Value.
- Initial Value: The Initial Value of each Reference Asset equals its Closing Value on the Pricing Date.
- Closing Value: For each Reference Asset, the Closing Value is its closing value published by its Index Sponsor as displayed on the relevant Bloomberg page or any successor page or service.
- Final Value: For each Reference Asset, the Closing Value of such Reference Asset on its Final Valuation Date.
- Barrier Value: With respect to each Reference Asset, the Barrier Value is equal to 60.00% of its Initial Value.
- Least Performing Reference Asset: The Reference Asset with the lowest Percentage Change as compared to the Percentage Change of any other Reference Asset.
- Least Performing Percentage Change: The Percentage Change of the Least Performing Reference Asset.
Risks:
- Return Risk: The Notes do not guarantee the return of the Principal Amount and investors may lose up to their entire investment. The potential positive return is limited to any Contingent Interest Payments paid, if any.
- Issuer Call Risk: TD may elect to call the Notes prior to maturity, potentially limiting the holding period and increasing reinvestment risk.
- Market Risk: Investors are exposed to the market risk of each Reference Asset on each Contingent Interest Observation Date. Poor performance by any Reference Asset will negatively affect your return.
- Liquidity Risk: The Notes will not be listed or displayed on any securities exchange or electronic communications network, and there may be little or no secondary market for the Notes.
- Credit Risk: Investors are subject to TD’s credit risk, and TD’s credit ratings and credit spreads may adversely affect the market value of the Notes.
- Taxation Risk: The U.S. tax treatment of the Notes is uncertain, and it is possible that the Notes could be treated for tax purposes as a single contingent payment debt instrument, resulting in a different timing and character of income.
Estimated Value:
The estimated value of the Notes at the time the terms of your Notes are set on the Pricing Date is expected to be between $940.00 and $975.00 per Note, as discussed further under “Additional Risk Factors — Risks Relating to Estimated Value and Liquidity”. The estimated value is expected to be less than the public offering price of the Notes.
Conclusion:
The Callable Contingent Interest Barrier Notes offer a potentially high return, but also involve significant risks, including return risk, issuer call risk, market risk, liquidity risk, credit risk, and taxation risk. Investors should carefully consider these risks and consult their investment, legal, tax, accounting and other advisors before investing in the Notes.
