The Toronto-Dominion Bank (TD) has offered 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 pay a Contingent Interest Rate of 11.70% per annum if the Closing Value of each Reference Asset is greater than or equal to its Contingent Interest Barrier Value (70.00% of its Initial Value) on the Contingent Interest Observation Date; otherwise, no Contingent Interest Payment will be paid.
TD may call the Notes in whole on any Call Payment Date (monthly, commencing on the sixth Contingent Interest Payment Date) upon at least three Business Days’ prior written notice, regardless of the Closing Values of the Reference Assets. If called, the payment will be the Principal Amount plus any Contingent Interest Payment otherwise due. If not called, the payment at maturity will depend on the Final Value of each Reference Asset relative to its Barrier Value (70.00% 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: the sum of (1) $1,000 plus (2) the product of (i) $1,000 times (ii) the Least Performing Percentage Change.
Investors may suffer a percentage loss on their initial investment if the Final Value of the Least Performing Reference Asset is less than its Barrier Value, with a loss of 1% of the Principal Amount for each 1% the Final Value is less than its Initial Value, potentially resulting in a total loss.
Key risks include:
- Return Risks: The Notes do not guarantee the return of principal or the payment of Contingent Interest Payments. Investors may lose up to their entire investment if the Final Value of any Reference Asset is below its Barrier Value.
- Issuer Call Risk: TD may call the Notes early, limiting the holding period and reinvestment risk.
- Market Risk: Investors are exposed to the market risk of each Reference Asset on each Contingent Interest Observation Date, with no diversification benefit among the assets.
- Liquidity Risk: The Notes may not have an active secondary market, and sales could result in significant losses.
- Taxation Risk: The U.S. tax treatment of the Notes is uncertain, with potential implications for ordinary income treatment and reporting obligations.
- Credit Risk: Payments are subject to TD’s credit risk, and changes in credit ratings may adversely affect the Notes’ market value.
The estimated value of the Notes at the Pricing Date was $983.70 per Note, lower than the public offering price of $993.50 (99.35%) per Note. The estimated value is based on TD’s internal funding rate and models, which may differ from other financial institutions and not reflect future secondary market prices.
