The Toronto-Dominion Bank (TD) is offering Callable Fixed Rate Notes due December 17, 2027, with a fixed interest rate of 4.15% per annum. The Notes will accrue interest from the Issue Date to the Maturity Date, with interest payments made on the 17th calendar day of each June and December, commencing on December 17, 2026.
TD has the option to redeem the Notes on any Optional Call Date, with the possibility of redemption prior to the Maturity Date if the interest payable on the Notes is higher than the interest on comparable instruments in the market. The Notes are unsecured and not insured or guaranteed by the Canada Deposit Insurance Corporation (CDIC) or any other governmental agency.
The Notes are bail-inable debt securities, subject to conversion into common shares of TD or its affiliates under Canadian bank resolution powers. This conversion could result in holders losing their investment, including the principal amount plus accrued interest, with the remaining Notes or converted shares potentially having little value.
Investors in the Notes face several risks, including credit risk associated with TD, conversion risk under Canadian bank resolution powers, and early redemption risk. Additionally, the Notes may not have an active secondary market, potentially leading to significant losses if sold before maturity.
From a U.S. federal income tax perspective, the Notes are treated as indebtedness, with interest payments taxable as ordinary income. Upon disposition, a U.S. Holder may recognize capital gain or loss. U.S. Holders are also subject to the 3.8% Medicare tax on net investment income and potential reporting obligations for specified foreign financial assets.
For Canadian federal income tax purposes, non-resident holders of the Notes are generally not subject to withholding tax on interest payments, unless the interest is classified as "participating debt interest." Dividends paid on common shares acquired upon conversion are subject to a 25% withholding tax.
TD Securities (USA) LLC, an affiliate of TD, is acting as the agent for the sale of the Notes, receiving a commission of up to $17.00 (1.70%) per Note. The Notes are not intended for retail investors in the European Economic Area (EEA) or the United Kingdom (UK), and no key information document has been prepared for offering or selling the Notes to retail investors in these regions.
