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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Bank Nova Scotia Halifax | NYSE:BNS | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.55 | 1.19% | 46.85 | 47.03 | 46.54 | 47.03 | 1,572,888 | 01:00:00 |
Subject to Completion
Preliminary Term Sheet dated
March 29, 2019
|
Filed Pursuant to Rule 433
Registration Statement No. 333-228614 (To Prospectus dated December 26, 2018, Prospectus Supplement dated December 26, 2018, and Product Prospectus Supplement EQUITY SUN-1 dated February 21, 2019) |
Per Unit
|
Total
|
|
Public offering price
(1)
|
$ 10.00
|
$
|
Underwriting discount
(1)
|
$ 0.25
|
$
|
Proceeds, before expenses, to BNS
|
$ 9.75
|
$
|
(1)
|
For any purchase of 500,000 units or more in a single transaction by an individual investor or in combined transactions with the investor's household in
this offering, the public offering price and the underwriting discount will be $9.95 per unit and $0.20 per unit, respectively. See “Supplement to the Plan of Distribution” below.
|
Are Not FDIC Insured
|
Are Not Bank Guaranteed
|
May Lose Value
|
Terms of the Notes
|
Redemption Amount Determination | ||
Issuer: | The Bank of Nova Scotia (“BNS”) |
Notwithstanding anything to the contrary in the accompanying product prospectus supplement, the Redemption Amount will be determined as set forth in
this term sheet.
On the maturity date, you will receive a cash payment per unit determined as follows:
|
|
Principal Amount
:
|
$10.00 per unit
|
|
|
Term:
|
Approximately four years
|
||
Market Measure:
|
The S&P 500
®
Index (Bloomberg symbol: “SPX”), a price return index
|
||
Starting Value:
|
The closing level of the Market Measure on the pricing date
|
||
Ending Value: | The closing level of the Market Measure on the calculation day. The scheduled calculation day is subject to postponement in the event of Market Disruption Events, as described beginning on page PS-28 of product prospectus supplement EQUITY SUN-1. | ||
Step Up Value:
|
[118% to 124%] of the Starting Value. The actual Step Up Value will be determined on the pricing date.
|
||
Step Up Payment: |
[$1.80 to $2.40] per unit, which represents a return of [18% to 24%] over the principal amount. The actual Step Up Payment will be determined on the
pricing date.
|
||
Threshold Value:
|
90% of the Starting Value.
|
||
Calculation Day:
|
Approximately the fifth scheduled Market Measure Business Day immediately preceding the maturity date.
|
||
Fees and Charges
:
|
The underwriting discount of $0.25 per unit listed on the cover page and the
hedging related charge of $0.075 per unit described in “Structuring the Notes” on page TS-15
.
|
||
Calculation Agent: |
Merrill Lynch, Pierce, Fenner & Smith Incorporated (“MLPF&S”).
|
◾
|
Product prospectus supplement EQUITY SUN-1 dated February 21, 2019:
https://www.sec.gov/Archives/edgar/data/9631/000091412119000426/bn50676784-424b2.htm |
◾
|
Prospectus supplement dated December 26, 2018:
https://www.sec.gov/Archives/edgar/data/9631/000091412118002473/bn50676984-424b3.htm |
◾
|
Prospectus dated December 26, 2018:
https://www.sec.gov/Archives/edgar/data/9631/000119312518357537/d677731d424b3.htm |
You may wish to consider an investment in the notes if:
|
The notes may not be an appropriate investment for you if:
|
|
◾
You
anticipate that the Index will either increase from the Starting Value to the Ending Value or decrease from the Starting Value to an Ending Value that is at or above the Threshold
Value
.
◾
You are willing to risk a substantial loss of principal if the Index decreases from the Starting Value to an Ending Value that is below the Threshold Value
.
◾
You are willing to forgo the interest payments that are paid on conventional interest bearing debt securities.
◾
You are willing to forgo dividends or other benefits of owning the stocks included in the Index
.
◾
You are willing to accept a limited or no market for sales prior to maturity, and understand that the market prices for the notes, if any, will be affected by various
factors, including our actual and perceived creditworthiness, our internal funding rate and fees and charges on the notes
.
◾
You are willing to assume our credit risk, as issuer of the notes, for all payments under the notes, including the Redemption Amount.
|
◾
You believe that the Index will decrease from the Starting Value to an Ending Value that
is below the Threshold Value.
◾
You seek 100% principal repayment or preservation of capital.
◾
You seek interest payments or other current income on your investment.
◾
You want to receive dividends or other distributions paid on the stocks included in the Index.
◾
You seek an investment for which there will be a liquid secondary market.
◾
You are unwilling or are unable to take market risk on the notes or to take our credit risk as issuer of the notes.
|
|
This graph reflects the returns on the notes, based on a Threshold Value of 90% of the Starting Value, a hypothetical Step Up Payment of $2.10 per
unit (the midpoint of the Step Up Payment range of [$1.80 to $2.40]) and a hypothetical Step Up Value of 121% of the Starting Value (the midpoint of the Step Up Value range of [118% to 124%]). The green line reflects the returns on the
notes, while the dotted gray line reflects the returns of a direct investment in the stocks included in the Index, excluding dividends.
This graph has been prepared for purposes of illustration only.
|
Ending Value |
Percentage Change from the Starting Value to the Ending Value |
Redemption Amount per Unit |
Total Rate of Return on the Notes |
|||
0.00 |
-100.00% |
$1.00 |
-90.00% |
|||
50.00 |
-50.00% |
$6.00 |
-40.00% |
|||
80.00 |
-20.00% |
$9.00 |
-10.00% |
|||
90.00 (1) |
-10.00% |
$11.00 |
10.00% |
|||
94.00 |
-6.00% |
$10.60 |
6.00% |
|||
95.00 |
-5.00% |
$10.50 |
5.00% |
|||
97.00 |
-3.00% |
$10.30 |
3.00% |
|||
100.00 (2) |
0.00% |
$12.10 (3) |
21.00% |
|||
102.00 |
2.00% |
$12.10 |
21.00% |
|||
105.00 |
5.00% |
$12.10 |
21.00% |
|||
110.00 |
10.00% |
$12.10 |
21.00% |
|||
120.00 |
20.00% |
$12.10 |
21.00% |
|||
121.00 (4) |
21.00% |
$12.10 |
21.00% |
|||
130.00 |
30.00% |
$13.00 |
30.00% |
|||
132.00 |
32.00% |
$13.20 |
32.00% |
|||
140.00 |
40.00% |
$14.00 |
40.00% |
|||
150.00 |
50.00% |
$15.00 |
50.00% |
|||
160.00 |
60.00% |
$16.00 |
60.00% |
(1)
|
This is the
hypothetical
Threshold Value.
|
(2)
|
The
hypothetical
Starting Value of 100 used in
these examples has been chosen for illustrative purposes only, and does not represent a likely actual Starting Value for the Market Measure.
|
(3)
|
This amount represents the sum of the principal amount and the
hypothetical
Step Up Payment of $2.10.
|
(4)
|
This is the
hypothetical
Step Up Value.
|
Example 1
|
||
The Ending Value is 80.00, or 80.00% of the Starting Value:
|
||
Starting Value:
|
100.00
|
|
Threshold Value: | 90.00 | |
Ending Value:
|
80.00
|
|
|
Redemption Amount per unit
|
Example 2
|
||
The Ending Value is 95.00, or 95.00% of the Starting Value:
|
||
Starting Value:
|
100.00
|
|
Threshold Value: | 90.00 | |
|
Redemption Amount per unit
|
Example 3
|
||
The Ending Value is 110.00, or 110.00% of the Starting Value:
|
||
Starting Value:
|
100.00
|
|
Step Up Value:
|
121.00
|
|
Ending Value:
|
110.00
|
|
|
Redemption Amount per unit,
the principal amount plus the Step Up Payment, since the Ending Value is equal to or greater
than the Starting Value, but less than the Step Up Value.
|
Example 4
|
||
The Ending Value is 132.00, or 132.00% of the Starting Value:
|
||
Starting Value:
|
100.00
|
|
Step Up Value:
|
121.00
|
|
Ending Value:
|
132.00
|
|
|
Redemption Amount per unit
|
◾
|
Depending on the performance of the Index as measured shortly before the maturity date, your investment may result in a loss; there is no guaranteed return of
principal.
|
◾
|
Your potential for a positive return based on the depreciation of the Index is limited and may be less than that of a comparable investment that takes a short
position directly in the Index (or the stocks included in the Index). The absolute value return feature applies only if the Ending Value is less than the Starting Value but greater than or equal to the Threshold Value. Because the Threshold
Value is 90.00% of the Starting Value, any positive return due to the depreciation of the Index is limited to 10.00%. Any decline in the Ending Value from the Starting Value by more than 10.00% will result in a loss, rather than a positive
return, on the notes. In contrast, for example, a short position in the Index (or the stocks included in the Index) would allow you to receive the full benefit of any decrease in the level of the Index (or the stocks included in the Index).
|
◾
|
Your return on the notes may be less than the yield you could earn by owning a conventional fixed or floating rate debt security of comparable maturity.
|
◾
|
Your investment return may be less than a comparable investment directly in the stocks included in the Index.
|
◾
|
Payments on the notes are subject to our credit risk, and actual or perceived changes in our creditworthiness are expected to affect the value of the notes.
If we become insolvent or are unable to pay our obligations, you may lose your entire investment.
|
◾
|
Our initial estimated value of the notes will be lower than the public offering price of the notes. Our initial estimated value of the notes is only an
estimate. The public offering price of the notes will exceed our initial estimated value because it includes costs associated with selling and structuring the notes, as well as hedging our obligations under the notes with a third party,
which may include MLPF&S or one of its affiliates. These costs include the underwriting discount and an expected hedging related charge, as further described in “Structuring the Notes” on page TS-15.
|
◾
|
Our initial estimated value of the notes does not represent future values of the notes and may differ from others’ estimates. Our initial estimated value of
the notes is determined by reference to our internal pricing models when the terms of the notes are set. These pricing models consider certain factors, such as our internal funding rate on the pricing date, the expected term of the notes,
market conditions and other relevant factors existing at that time, and our assumptions about market parameters, which can include volatility, dividend rates, interest rates and other factors. Different pricing models and assumptions could
provide valuations for the notes that are different from our initial estimated value. In addition, market conditions and other relevant factors in the future may change, and any of our assumptions may prove to be incorrect. On future dates,
the market value of the notes could change significantly based on, among other things, the performance of the Index, changes in market conditions, our creditworthiness, interest rate movements and other relevant factors. These factors,
together with various credit, market and economic factors over the term of the notes, are expected to reduce the price at which you may be able to sell the notes in any secondary market and will affect the value of the notes in complex and
unpredictable ways. Our initial estimated value does not represent a minimum price at which we or any agents would be willing to buy your notes in any secondary market (if any exists) at any time.
|
◾
|
Our initial estimated value is not determined by reference to credit spreads or the borrowing rate we would pay for our conventional fixed-rate debt
securities. The internal funding rate used in the determination of our initial estimated value of the notes generally represents a discount from the credit spreads for our conventional fixed-rate debt securities and the borrowing rate we
would pay for our conventional fixed-rate debt securities. If we were to use the interest rate implied by the credit spreads for our conventional fixed-rate debt securities, or the borrowing rate we would pay for our conventional fixed-rate
debt securities, we would expect the economic terms of the notes to be more favorable to you. Consequently, our use of an internal funding rate for the notes would have an adverse effect on the economic terms of the notes, the initial
estimated value of the notes on the pricing date, and the price at which you may be able to sell the notes in any secondary market.
|
◾
|
A trading market is not expected to develop for the notes. Neither we nor MLPF&S is obligated to make a market for, or to repurchase, the notes. There is
no assurance that any party will be willing to purchase your notes at any price in any secondary market.
|
◾
|
Our business, hedging and trading activities, and those of MLPF&S and our respective affiliates (including trades in shares of companies included in the
Index), and any hedging and trading activities we, MLPF&S or our respective affiliates engage in for our clients’ accounts, may affect the market value and return of the notes and may create conflicts of interest with you.
|
◾
|
The Index sponsor may adjust the Index in a way that may adversely affect its level and your interests, and the Index sponsor has no obligation to consider
your interests.
|
◾
|
You will have no rights of a holder of the securities included in the Index or of a holder with a short position directly in the Index (or of the securities
included in the Index), and you will not be entitled to receive securities or dividends or other distributions by the issuers of those securities.
|
◾
|
While we, MLPF&S or our respective affiliates may from time to time own securities of companies included in the Index, except to the
extent that the common stock of Bank of America Corporation (the parent company of MLPF&S) is included in the Index, we, MLPF&S and our respective affiliates do not control any company included in the Index, and have not verified
any disclosure made by any other company.
|
◾
|
There may be potential conflicts of interest involving the calculation agent, which is MLPF&S. We have the right to appoint and remove the calculation
agent.
|
◾
|
The U.S. federal income tax consequences of the notes are uncertain, and may be adverse to a holder of the notes. See “Summary of U.S. Federal Income Tax
Consequences” below.
|
◾
|
The conclusion that no portion of the interest paid or credited or deemed to be paid or credited on a note will be “Participating Debt
Interest” subject to Canadian withholding tax is based in part on the current published administrative position of the CRA. There cannot be any assurance that CRA’s current published administrative practice will not be subject to change,
including potential expansion in the current administrative interpretation of Participating Debt Interest subject to Canadian withholding tax. If, at any time, the interest paid or credited or deemed to be paid or credited on a note is
subject to Canadian withholding tax, you will receive an amount that is less than the Redemption Amount. You should consult your own adviser as to the potential for such withholding and the potential for reduction or refund of part or all
of such withholding, including under any bilateral Canadian tax treaty the benefits of which you may be entitled. For a discussion of the Canadian federal income tax consequences of investing in the notes, see “Summary of Canadian Federal
Income Tax Consequences” below, “Canadian Taxation—Debt Securities” on page 62 of the prospectus dated December 26, 2018, and “Supplemental Discussion of Canadian Federal Income Tax Consequences” on page PS-41 of product prospectus
supplement EQUITY SUN-1.
|
•
|
holdings by other publicly traded corporations, venture capital firms, private equity firms, or strategic partners or leveraged buyout groups;
|
•
|
holdings by government entities, including all levels of government within the United States or foreign countries, except for pension and retirement funds; and
|
•
|
holdings by current or former officers and directors of the company, funders of the company, or family trusts of officers, directors or founders. Second, holdings of trusts, foundations, pension funds,
employee stock ownership plans or other investment vehicles associated with and controlled by the company.
|
Corporate Action
|
Share Count Revision Required?
|
Divisor Adjustment Required?
|
||
Stock split
|
Yes – share count is revised to reflect new count
|
No – share count and price changes are off-setting
|
||
Change in shares outstanding (secondary issuance, share repurchase and/or share buy-back)
|
Yes – share count is revised to reflect new count
|
Yes – divisor adjustment reflects change in market capitalization
|
||
Spin-off if spun-off company is not being added to the Index
|
|
No
|
|
Yes – divisor adjustment reflects decline in index market value (i.e. value of the spun-off unit)
|
Spin-off if spun-off company is being added to the Index and no company is being removed
|
No
|
No
|
||
Spin-off if spun-off company is being added to the Index and another company is being removed
|
|
No.
|
|
Yes – divisor adjustment reflects deletion
|
Special dividends
|
|
No.
|
|
Yes – calculation assumes that share price drops by the amount of the dividend; divisor adjustment reflects this change in index market value
|
Change in IWF
|
|
No
|
|
Yes – divisor change reflects the change in market value caused by the change to an IWF
|
Company added to or deleted from the Index | No. |
Yes – divisor is adjusted by the net change in market value
|
||
Rights offering
|
|
No.
|
|
Yes – divisor adjustment reflects increase in market capitalization (calculation assumes that offering is fully subscribed at the set price)
|
•
|
the investor’s spouse (including a domestic partner), siblings, parents, grandparents, spouse’s parents, children and grandchildren, but excluding accounts held by aunts, uncles, cousins, nieces, nephews or any
other family relationship not directly above or below the individual investor;
|
•
|
a family investment vehicle, including foundations, limited partnerships and personal holding companies, but only if the beneficial owners of the vehicle consist solely of the investor or members of the
investor’s household as described above; and
|
•
|
a trust where the grantors and/or beneficiaries of the trust consist solely of the investor or members of the investor’s household as described above; provided that, purchases of the notes by a trust generally
cannot be aggregated together with any purchases made by a trustee’s personal account.
|
TS-
18
|
1 Year Bank Nova Scotia Halifax Chart |
1 Month Bank Nova Scotia Halifax Chart |
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