Bank of Nova Scotia FWP: High-Yield ANET-Linked Auto-Callable Due 2028
Rhea-AI Filing Summary
Bank of Nova Scotia (BNS) is marketing Contingent Income Auto-Callable Securities linked to the common stock of Arista Networks, Inc. (ANET). The $1,000-denominated senior unsecured notes run from the July 9 2025 issue date to the July 7 2028 maturity, unless called earlier.
Income mechanics: Each quarterly determination date, if ANET closes at or above the 50 % downside threshold, investors receive a $28.70 coupon (11.48% p.a.) plus any missed coupons via the “memory” feature. If on any determination date ANET closes at or above the 100 % call threshold, the notes are automatically redeemed at par plus the applicable coupon and any memory coupons.
Principal repayment: At maturity, if ANET’s final price is at least 50% of the initial price, holders receive par plus the last coupon and any unpaid memory coupons. If the final price is below 50%, repayment equals the share performance factor times par, exposing investors to losses of >50%—potentially down to zero.
Key structural details: • Minimum investment: $1,000. • Estimated issue value: $931.69 – $961.69 (93.17–96.17% of face), reflecting embedded fees including a $22.50 sales commission. • Notes are not exchange-listed; secondary liquidity depends on the distributor. • All payments are subject to BNS credit risk.
Risk highlights: Investors forgo any upside in ANET, may receive no coupons, face market value erosion prior to maturity, and shoulder credit, liquidity, tax and conflicts-of-interest risks. Reinvestment risk exists if the notes are called early.
Positive
- High contingent coupon of 11.48% per annum with memory feature enhances potential income during favorable market periods.
- Automatic call at par plus coupons provides early monetization if ANET remains strong, shortening duration and credit exposure.
Negative
- Principal at full risk below 50% barrier, exposing investors to losses exceeding 50% of invested capital.
- No participation in ANET upside; return capped at coupons, limiting reward relative to equity risk taken.
- Estimated issue value 3–7% below face indicates an immediate mark-to-market deficit for investors.
- Notes are unlisted and thinly traded, leading to potentially poor secondary-market liquidity and pricing.
- All payments subject to BNS credit risk; deterioration in issuer credit could impair note value.
- Early redemption creates reinvestment risk precisely when equity performance is strong.
Insights
TL;DR Attractive 11.48% contingent yield, but 50% barrier means pronounced downside risk and no equity upside; neutral impact overall.
The security’s high headline coupon and memory feature improve cash-flow visibility compared with typical autocallables, yet investors are effectively writing a 50% digital put without upside participation. The estimated value indicates a 3-7% initial mark-down and underscores significant frictional costs. Lack of listing and discretionary secondary markets heighten liquidity risk, while credit exposure to BNS remains non-trivial even for an A-rated issuer. Because cash flows depend entirely on ANET price behaviour, concentration risk is material. For balanced portfolios, the note may serve yield enhancement if investors accept equity-like downside; otherwise, a traditional dividend stock or fixed-income instrument could be less complex. Overall, neither clearly accretive nor detrimental to BNS fundamentals—impact rated neutral.
TL;DR Note embeds deep short-put exposure; 50% breach leads to steep capital loss, compounded by liquidity and valuation discount.
Stress scenarios reveal that a 51% or greater drawdown in ANET translates directly into >49% principal loss (e.g., –60% stock ➔ $400 payout). Historical volatility for ANET often exceeds broad-market averages, increasing the probability of threshold breach. Secondary market bids will reference BNS/SCUSA models, typically below intrinsic value because of hedging costs, making exit expensive. Early call risk creates reinvestment uncertainty: investors are most likely to lose high coupons just when equity markets recover. Uncertain U.S./Canadian tax treatment may further erode net returns. While credit risk of BNS is currently modest, widening spreads could depress note valuations. These layered risks justify a cautious stance.
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ISSUER FREE WRITING PROSPECTUS |
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Filed Pursuant to Rule 433 |
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Registration Statement No. 333-282565 |
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Dated June 26, 2025 |
Contingent Income Auto-Callable Securities due on or about July 7, 2028
Based on the Performance of the Common Stock of Arista Networks, Inc.
Principal at Risk Securities
This document provides a summary of the terms of the Contingent Income Auto-Callable Securities (the “securities”). Investors should carefully review the accompanying preliminary pricing supplement for the securities, the accompanying product supplement, the prospectus supplement and the prospectus, as well as the “Risk Considerations” section below, before making an investment decision.
The securities do not guarantee any return of principal at maturity. Investors will not participate in any appreciation of the underlying stock and must be willing to accept the risk of not receiving any contingent quarterly coupons over the term of the securities. The securities are senior unsecured debt securities issued by The Bank of Nova Scotia (“BNS”), and all payments on the securities are subject to the credit risk of BNS. As used in this document, “we,” “us,” or “our” refers to BNS.
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SUMMARY TERMS |
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Issuer: |
The Bank of Nova Scotia |
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Issue: |
Senior Note Program, Series A |
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Underlying stock: |
Common stock of Arista Networks, Inc. (Bloomberg Ticker: “ANET UN”) |
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Stated principal amount: |
$1,000.00 per security |
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Minimum investment: |
$1,000 (1 security) |
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Pricing date: |
July 3, 2025 |
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Original issue date: |
July 9, 2025 (3 business days after the pricing date; see preliminary pricing supplement). |
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Final determination date: |
July 3, 2028, subject to postponement for certain market disruption events and as described in the accompanying product supplement. |
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Maturity date: |
July 7, 2028, subject to postponement for certain market disruption events and as described in the accompanying product supplement. |
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Early redemption: |
If the closing price of the underlying stock on any determination date other than the final determination date is greater than or equal to the call threshold price, the securities will be automatically redeemed for an amount per security equal to the early redemption payment on the first contingent coupon payment date immediately following the related determination date. No further payments will be made on the securities once they have been redeemed. |
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Early redemption payment: |
The early redemption payment will be an amount equal to (i) the stated principal amount plus (ii) the contingent quarterly coupon with respect to the applicable determination date and any previously unpaid contingent quarterly coupons with respect to any previous determination dates pursuant to the memory coupon feature. |
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Contingent quarterly coupon: |
▪If the closing price on any determination date is greater than or equal to the downside threshold price, we will pay on the related contingent coupon payment date a contingent quarterly coupon of $28.70 (equivalent to 11.48% per annum of the stated principal amount) per security, plus any previously unpaid contingent quarterly coupons with respect to any previous determination dates pursuant to the memory coupon feature. ▪If the closing price on any determination date is less than the downside threshold price, we will not pay a contingent quarterly coupon on the related contingent coupon payment date. |
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Memory coupon feature: |
If a contingent quarterly coupon is not paid on a contingent coupon payment date (other than the maturity date) because the closing price of the underlying stock on the related determination date is less than the downside threshold price, such contingent quarterly coupon will be paid on a later contingent coupon payment date if the closing price of the underlying stock on the determination date corresponding to such later contingent coupon payment date is greater than or equal to the downside threshold price. For the avoidance of doubt, once a previously unpaid contingent quarterly coupon has been paid on a later contingent coupon payment date, it will not be made again on any subsequent contingent coupon payment date. If the closing price of the underlying stock on each of the determination dates is less than the downside threshold price, you will receive no contingent quarterly coupons during the term of, and will not receive a positive return on, the securities. |
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Determination dates: |
Quarterly (as set forth on the cover of the preliminary pricing supplement), subject to postponement for non-trading days and certain market disruption events as described in the accompanying product supplement. |
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Contingent coupon payment dates: |
Quarterly (as set forth on the cover of the preliminary pricing supplement), subject to postponement for non-business days and certain market disruption events as described in the accompanying product supplement. |
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Payment at maturity: |
▪If the final share price is greater than or equal to the downside threshold price: (i) the stated principal amount plus (ii) the contingent quarterly coupon with respect to the final determination date and any previously unpaid contingent quarterly coupons with respect to any previous determination dates pursuant to the memory coupon feature ▪If the final share price is less than the downside threshold price: (i) the stated principal amount multiplied by (ii) the share performance factor If the final share price is less than the downside threshold price, the payment at maturity will be less than 50.00% of the stated principal amount and could be as low as zero. |
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Share performance factor: |
Final share price divided by the initial share price |
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Call threshold price: |
100.00% of the initial share price, as may be adjusted in the case of certain adjustment events as described in the accompanying product supplement |
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Downside threshold price: |
50.00% of the initial share price, as may be adjusted in the case of certain adjustment events as described in the accompanying product supplement |
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Initial share price: |
The closing price of the underlying stock on the pricing date, as may be adjusted in the case of certain adjustment events as described in the accompanying product supplement. |
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Final share price: |
The closing price of the underlying stock on the final determination date, as may be adjusted in the case of certain adjustment events as described in the accompanying product supplement |
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CUSIP / ISIN: |
06418VZV9 / US06418VZV97 |
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Listing: |
The securities will not be listed or displayed on any securities exchange or any electronic communications network. |
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Commission: |
$22.50 per stated principal amount. |
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Estimated value on the pricing date: |
Expected to be between $931.69 and $961.69 per security. See “Risk Factors” in the preliminary pricing supplement. |
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Preliminary pricing supplement: |
http://www.sec.gov/Archives/edgar/data/9631/000183988225034968/bns_424b2-19020.htm |
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HYPOTHETICAL PAYOUT |
The below figures are based on a hypothetical downside threshold price of 50.00% of a hypothetical initial share price and are purely hypothetical (the actual terms of your securities will be determined on the pricing date and will be specified in the final pricing supplement).
Hypothetical Payment at Maturity if No Early Redemption Occurs
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Change in Underlying Stock |
Payment at Maturity (excluding any contingent quarterly coupon payable at maturity) |
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+50.00% |
$1,000.00 |
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+40.00% |
$1,000.00 |
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+30.00% |
$1,000.00 |
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+20.00% |
$1,000.00 |
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+10.00% |
$1,000.00 |
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0.00% |
$1,000.00 |
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-10.00% |
$1,000.00 |
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-20.00% |
$1,000.00 |
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-30.00% |
$1,000.00 |
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-40.00% |
$1,000.00 |
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-50.00% |
$1,000.00 |
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-51.00% |
$490.00 |
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-60.00% |
$400.00 |
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-70.00% |
$300.00 |
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-80.00% |
$200.00 |
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-90.00% |
$100.00 |
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-100.00% |
$0.00 |
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You will find a link to the accompanying preliminary pricing supplement for the securities above and links to the accompanying product supplement and accompanying prospectus for the securities under “Additional Information About BNS and the Securities” in the preliminary pricing supplement, which you should read and understand prior to investing in the securities.
The issuer has filed a registration statement (including a prospectus as supplemented by a prospectus supplement, product supplement and the preliminary pricing supplement) with the Securities and Exchange Commission (the “SEC”) for the offering to which this communication relates. Before you invest, you should read the accompanying prospectus in that registration statement and the other documents the issuer has filed with the SEC, including the accompanying preliminary pricing supplement and the accompanying prospectus supplement and product supplement, for more complete information about the issuer and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the issuer, any underwriter or any dealer participating in the offering will arrange to send you the prospectus if you request it by calling (212) 225-5678. Our Central Index Key, or CIK, on the SEC web site is 0000009631.
Risk Considerations
The risks set forth below are discussed in more detail in the “Risk Factors” section in the preliminary pricing supplement. Please review those risk factors carefully prior to making an investment decision.
Risks Relating to Return Characteristics
▪Risk of loss at maturity.
▪Contingent repayment of stated principal amount only at maturity.
▪You may not receive any contingent quarterly coupons.
▪Greater expected volatility with respect to the underlying stock generally reflects a higher contingent quarterly coupon and a higher expectation as of the pricing date that the final share price of the underlying stock could be less than the downside threshold price on the final determination date.
▪The securities are subject to reinvestment risk in the event of an early redemption.
▪The contingent quarterly coupon, if any, is based solely on the closing price or the final share price, as applicable.
▪Your potential return on the securities is limited, you will not participate in any appreciation of the underlying stock and you will not realize a return beyond the returns represented by the contingent quarterly coupons received, if any, during the term of the securities.
Risks Relating to Characteristics of the Underlying Stock
▪The securities are subject to risks associated with investments in single equity securities.
▪There can be no assurance that the investment view implicit in the securities will be successful.
▪There is no affiliation between BNS and the underlying stock issuer.
Risks Relating to Estimated Value and Liquidity
▪BNS’ initial estimated value of the securities at the time of pricing (when the terms of your securities are set on the pricing date) will be lower than the issue price of the securities.
▪Neither BNS’ nor SCUSA’s estimated value of the securities at any time is determined by reference to credit spreads or the borrowing rate BNS would pay for its conventional fixed-rate debt securities.
▪BNS’ initial estimated value of the securities does not represent future values of the securities and may differ from others’ (including SCUSA’s) estimates.
▪The securities have limited liquidity.
▪The price at which SCUSA would buy or sell your securities (if SCUSA makes a market, which it is not obligated to do) will be based on SCUSA’s estimated value of your securities.
▪The price of the securities prior to maturity will depend on a number of factors and may be substantially less than the stated principal amount.
Risks Relating to General Credit Characteristics
▪Payments on the securities are subject to the credit risk of BNS.
Risks Relating to Hedging Activities and Conflicts of Interest
▪Hedging activities by BNS and SCUSA may negatively impact investors in the securities and cause our respective interests and those of our clients and counterparties to be contrary to those of investors in the securities.
▪The calculation agent can make antidilution and other adjustments that may adversely affect the market value of, and any amounts payable on, the securities.
▪We, SCUSA and our other affiliates regularly provide services to, or otherwise have business relationships with, a broad client base, which has included and may include us and the underlying stock issuer and the market activities by us, SCUSA or our other affiliates for our or their own respective accounts or for our clients could negatively impact investors in the securities.
▪Activities conducted by BNS and its affiliates may impact the market price of the underlying stock and the value of the securities.
▪The calculation agent will have significant discretion with respect to the securities, which may be exercised in a manner that is adverse to your interests.
▪BNS and its affiliates may publish research or make opinions or recommendations that are inconsistent with an investment in the securities.
Risks Relating to Canadian and U.S. Federal Income Taxation
▪Uncertain tax treatment. Significant aspects of the tax treatment of the securities are uncertain. You should consult your tax advisor about your tax situation. See “Additional Information About the Securities — Tax Considerations” and “— Material Canadian Income Tax Consequences” in the preliminary pricing supplement.
Underlying Stock
For information about the underlying stock, including historical performance information, see “Information About the Underlying Stock” in the preliminary pricing supplement.
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FAQ
What is the annualized coupon rate on BNS Contingent Income Auto-Callable Securities?
When can the BNS notes be called before maturity?
How much principal could I lose at maturity?
Are the securities listed on any exchange?
What is the estimated value of the securities on the pricing date?
Which underlying asset determines payments?
