The Toronto-Dominion Bank (TD) is offering Leveraged Capped Basket-Linked Notes due January 7, 2026, with a term of 25 to 28 months. The notes are unsecured and do not bear interest. The payment at maturity is linked to the performance of an unequally-weighted basket of five indices: EURO STOXX 50®Index (38.00% weighting), TOPIX (26.00% weighting), FTSE®100 Index (17.00% weighting), Swiss Market Index (11.00% weighting), and S&P/ASX 200 Index (8.00% weighting).
Key features and risks:
- Payment at Maturity:
- If the final basket level is greater than the initial basket level, the return equals 300.00% times the percentage change of the basket, subject to a maximum payment amount between $1,333.60 and $1,392.40 for each $1,000 principal amount.
- If the final basket level is equal to the initial basket level, the principal amount is returned.
- If the final basket level is less than the initial basket level, investors lose 1% of the principal amount for every 1% decline below the initial level, potentially losing the entire principal.
- Leverage and Cap:
- The leverage factor amplifies gains but also increases potential losses.
- A cap level is set on the maximum return, limiting upside potential.
- Basket Composition:
- The basket is unequally weighted, with EURO STOXX 50®Index, TOPIX, and FTSE®100 Index having a greater impact on returns.
- Changes in one component may be offset by changes in others.
- The basket reflects price return, not total return (dividends are not included).
- Risks:
- Return Risks: Principal is at risk if the basket declines. Returns may be negative and limited by the maximum payment amount. Payment is not linked to the basket levels except at valuation date.
- Basket Risks: Market risks associated with the basket components and their issuers. Changes in index sponsor policies or constituent changes could negatively impact the notes.
- Liquidity Risks: The notes are not guaranteed to have a secondary market, and if available, transaction costs may be high, potentially leading to significant losses.
- Estimated Value Risks: TD's initial estimated value is expected to be lower than the public offering price, reflecting costs and expected profits. The actual value may differ significantly from initial estimates and secondary market prices.
- Credit Risks: Investors are subject to TD's credit risk, and a downgrade in TD's credit ratings or an increase in credit spreads would negatively impact the notes' market value.
- Taxation Risks: The U.S. tax treatment of the notes is uncertain, with potential for different characterizations and withholding taxes affecting returns.
- Conflicts of Interest: Potential conflicts exist between TD and its affiliates, the calculation agent, and dealers involved in hedging activities.
Additional Information:
- The notes are priced on a Pricing Date, with the Issue Date expected three business days later.
- The Valuation Date, between 25 and 28 months after pricing, determines the basket level and, consequently, the payment at maturity.
- The Maturity Date is two business days after the Valuation Date.
- TD's initial estimated value of the notes is expected to be between $959.80 and $989.80 per $1,000 principal amount, lower than the public offering price.
- Hypothetical returns are provided for illustration only and do not predict future performance.
- Historical performance of the basket components is presented for reference but does not guarantee future results.
Conclusion:
The Leveraged Capped Basket-Linked Notes offer the potential for high returns but also carry significant risks, including the potential loss of principal. Investors should carefully consider the risks and consult with their advisors before investing.
