The Toronto-Dominion Bank (TD) has offered Callable Fixed Interest Barrier Notes linked to the least performing of the Russell 2000® Index (RTY) and the S&P 500® Index (SPX). The Notes pay a fixed interest rate of 8.10% per annum, subject to an Issuer Call feature that allows TD to call the Notes in whole on any monthly Call Payment Date (commencing on the sixth Interest Payment Date) with at least three business days' prior notice, regardless of the performance of the Reference Assets.
Key Features and Terms:
- Principal Amount: $1,000 per Note
- Term: Approximately 18 months, subject to Issuer Call
- Reference Assets: RTY and SPX
- Interest Rate: 8.10% per annum
- Barrier Value: 70.00% of Initial Value for both RTY and SPX
- Payment at Maturity:
- If both RTY and SPX are greater than or equal to their Barrier Values: $1,000 (Principal Amount)
- If any Reference Asset is less than its Barrier Value: $1,000 (Principal Amount) + ($1,000 × Least Performing Percentage Change)
- Least Performing Percentage Change: (Final Value - Initial Value) / Initial Value
Risks:
- Return Risk: The Notes do not guarantee the return of principal, and investors may lose up to their entire investment if the Final Value of any Reference Asset is less than its Barrier Value.
- Issuer Call Risk: TD may call the Notes prior to maturity, resulting in a return lower than if the Notes were held until maturity.
- Market Risk: Investors are exposed to the market risk of each Reference Asset on the Final Valuation Date.
- Liquidity Risk: The Notes are not listed, and there may be limited secondary market activity, potentially leading to significant losses if the Notes need to be sold before maturity.
- Credit Risk: Investors are subject to TD's credit risk, and a downgrade in TD's credit ratings could negatively affect the Notes' market value.
- Taxation Risk: The U.S. tax treatment of the Notes is uncertain, and alternative characterizations could lead to different tax consequences.
Estimates:
- Estimated Value: $985.60 per Note, which is less than the public offering price of $1,000 per Note.
- Underwriting Discount: $7.50 per Note ($0.75%)
- Proceeds to TD: $496,250 ($992.50 per Note)
Conclusion:
The Notes offer a fixed interest rate but come with significant risks, including the potential loss of principal, liquidity constraints, and uncertain tax treatment. Investors should carefully consider these risks in light of their individual circumstances and consult with financial, legal, and tax advisors before investing.
