The Toronto-Dominion Bank (TD) is offering Callable Contingent Interest Barrier Notes linked to the performance of the Nasdaq-100 Index® (NDX), the Russell 2000® Index (RTY), and the S&P 500® Index (SPX). The Notes have a term of approximately 3 years, with a maturity date around May 18, 2029, and a principal amount of $1,000 per note.
Key Features:
- Contingent Interest: The Notes pay a contingent interest payment at a rate of at least 11.10% 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). If any reference asset falls below its barrier value, no interest payment is made.
- Issuer Call Option: TD may call the Notes in whole at any monthly call payment date (starting from the third contingent interest payment date) with at least three business days' notice, regardless of the reference asset values.
- Payment at Maturity: If TD does not call the notes, the payment at maturity depends on the final value of each reference asset relative to its barrier value:
- If all final values are greater than or equal to their barrier values, the payment is $1,000 (principal amount).
- If any final value is less than its barrier value, the payment is $1,000 plus the product of $1,000 and the least performing percentage change.
Risks:
- Loss of Investment: Investors may lose their entire investment if the final value of any reference asset is less than its barrier value.
- No Interest Payments: If any reference asset falls below its contingent interest barrier value, no interest payments will be made.
- Reinvestment Risk: If TD calls the notes, investors may face reinvestment risk, as they might not be able to reinvest the proceeds at a comparable return.
- Market Risk: Investors are exposed to the market risk of each reference asset, as the value of the notes is tied to the performance of individual assets.
- Liquidity Risk: The notes are not listed, and there may be limited secondary market liquidity, potentially leading to significant losses if sold before maturity.
- Credit Risk: Investors are subject to TD's credit risk, as payments are contingent on TD's ability to meet its financial obligations.
- Tax Uncertainty: The U.S. tax treatment of the notes is uncertain, and potential adverse tax consequences could impact investors.
Reference Assets:
- Nasdaq-100 Index® (NDX): A modified capitalization-weighted index of 100 large domestic and international non-financial securities listed on the Nasdaq Stock Market®.
- Russell 2000® Index (RTY): A price-weighted index measuring the composite price performance of the smallest 2,000 companies in the Russell 3000® Index.
- S&P 500® Index (SPX): A market-capitalization-weighted index intended to provide an indication of the pattern of common stock price movement.
Estimated Value: The estimated value of the notes at the pricing date is expected to be between $920.00 and $955.00 per note, which is less than the public offering price of $1,000.00. The estimated value is based on TD's internal funding rate and pricing models, which may differ from other financial institutions.
Conclusion:
The Callable Contingent Interest Barrier Notes offer potentially high returns but come with significant risks, including the possibility of losing the entire investment, limited liquidity, and tax uncertainty. Investors should carefully consider these risks and consult with their financial advisors before investing.
