The Toronto-Dominion Bank (TD) has offered Autocallable Fixed Interest Barrier Notes linked to the least performing of Costco Wholesale Corporation, Microsoft Corporation, and Walmart Inc. The Notes pay an annual interest rate of approximately 9.20% ($7.667 per Note) and have a maturity date of March 16, 2028.
Key Features and Risks:
- Interest Payments: The Notes pay a fixed interest payment of $7.667 per Note on each Interest Payment Date, regardless of the performance of the Reference Assets, unless the Notes are automatically called.
- Automatic Call: The Notes will be automatically called if the Closing Value of each Reference Asset is greater than or equal to its Call Threshold Value (100.00% of Initial Value) on any Call Observation Date.
- Maturity Payment: If the Notes are not automatically called, the payment at maturity will depend on the Final Value of each Reference Asset relative to its Barrier Value (60.00% of Initial Value). If the Final Value is greater than or equal to the Barrier Value, the payment will be the sum of $1,000 plus the product of $1,000 and the Least Performing Percentage Change. If the Final Value is less than the Barrier Value, investors will suffer a percentage loss on their initial investment.
- Single Stock Risks: Investors are exposed to the market risk of each Reference Asset, and a decline in the value of one Asset will not be offset by the performance of others.
- Limited Return: The potential positive return is limited to the interest payments paid, and the Notes do not guarantee the return of the Principal Amount.
- Automatic Call and Reinvestment Risk: The Notes may be automatically called before maturity, and there is no guarantee of reinvestment at a comparable return.
- Estated Value and Liquidity: The estimated value of the Notes ($951.10 per Note) is less than the public offering price ($975.00 per Note). There may not be an active secondary market for the Notes, and sales may result in significant losses.
- Taxation: The U.S. tax treatment of the Notes is uncertain, and potential conflicts of interest exist between TD and its affiliates, as well as between investors and the Calculation Agent.
Reference Assets:
- Costco Wholesale Corporation (COST): Initial Value $1,000.00, Call Threshold Value $1,000.00, Barrier Value $595.338.
- Microsoft Corporation (MSFT): Initial Value $400.00, Call Threshold Value $404.88, Barrier Value $242.928.
- Walmart Inc. (WMT): Initial Value $150.00, Call Threshold Value $123.49, Barrier Value $74.094.
Hypothetical Returns:
- Example 1: Automatic call on the first Call Observation Date results in a total return of 4.6002%.
- Example 2: Automatic call on the third Call Observation Date results in a total return of 6.1336%.
- Example 3: No automatic call, Final Value of all Reference Assets greater than Barrier Value results in a total return of 18.4008%.
- Example 4: No automatic call, Final Value of at least one Reference Asset less than Barrier Value results in a loss of 41.5992%.
Conclusion:
Investors should be aware of the risks associated with the Notes, including the potential loss of the Principal Amount, limited returns, and uncertain taxation. The Notes are complex instruments, and investors are advised to consult their advisors before investing.
