Bank of Nova Scotia FWP: High-Yield GE Vernova Auto-Call Notes Detailed
Rhea-AI Filing Summary
The Bank of Nova Scotia (BNS) is marketing Contingent Income Auto-Callable Securities linked to the common stock of GE Vernova Inc. (GEV UN). Each unlisted note has a $1,000 stated principal amount, a three-year tenor (pricing: 18-Jul-2025; maturity: 21-Jul-2028) and is issued under BNS’s Senior Note Program, Series A.
Income profile: On each quarterly determination date, holders receive a $31.25 coupon (12.50% p.a.) provided the underlying closes at or above the 50% downside threshold. Thanks to a “memory” feature, missed coupons are paid on a later date if the threshold is subsequently met.
Auto-call: If GEV trades at or above its initial price (100% call threshold) on any quarterly observation before the final date, the note is automatically redeemed at par plus the applicable coupon(s), terminating future payments.
Principal repayment: • At maturity, if GEV is ≥ 50% of the initial price, investors receive par plus the final and any unpaid coupons. • If GEV is < 50%, repayment equals par multiplied by the share-performance factor, exposing investors to losses of more than 50% and potentially total loss.
Secondary considerations: The estimated value on the pricing date is $936.28-$966.28, below the issue price, reflecting upfront selling commission of $22.50 (2.25%) and structuring costs. The notes are senior unsecured obligations of BNS and carry its credit risk. They will not be listed, so liquidity relies on the issuer’s discretionary market-making.
Key risks highlighted include principal-at-risk, coupon deferral or non-payment, reinvestment risk if called, limited trading history for GEV, and uncertain U.S./Canadian tax treatment.
Positive
- High coupon potential: 12.50% annualized contingent income with memory feature can enhance cash flow in flat or moderately declining markets.
- 50% downside buffer: Investors are protected from loss of principal provided GE Vernova does not fall more than 50% at final observation.
- Auto-call mechanism: Early redemption at par plus coupon can shorten duration and boost annualized return if the underlying performs well.
Negative
- Principal at risk: If GE Vernova closes below 50% of the initial price at maturity, repayment declines one-for-one, potentially to zero.
- Capped upside: Investors forgo any appreciation in GE Vernova above the call threshold, limiting total return to received coupons.
- Secondary market risk: No exchange listing; liquidity is reliant on the issuer’s discretionary bid, likely at a material discount.
- Economic value gap: Estimated value of $936.28-$966.28 indicates a 3-6% structuring margin plus 2.25% commission embedded in the issue price.
Insights
TL;DR: Standard equity-linked autocall offers 12.5% yield but embeds 50% buffer; economic value ~3-6% below issue price; credit and liquidity risks persist.
The note’s 12.5% headline coupon is attractive in today’s rate backdrop, yet investors are effectively short a down-and-in put on GEV shares, capped at a 50% barrier. With only par repayment above the threshold, upside is foregone while downside is open beyond 50%. The issuer’s estimated value (≤ $966.28) implies a 3.4-6.4% structuring margin, in line with market norms. Lack of listing and discretionary market-making add exit-cost uncertainty. From BNS’s perspective, such issues raise non-core funding at a modest premium, but the scale is immaterial to group capital. Overall market impact is neutral; suitability depends on investors’ income preference versus equity downside tolerance.
TL;DR: Credit risk is moderate given BNS’s high investment-grade profile; note performance more sensitive to GEV equity path than to issuer solvency.
BNS holds long-standing ratings in the low-AA/high-A range from major agencies, suggesting low default probability over three years. Nevertheless, the note is senior unsecured, ranking pari passu with other BNS debt. Should BNS face stress, recovery on structured notes historically trails conventional bonds due to limited secondary demand. Investors must also weigh the limited operating history of GE Vernova, potentially increasing equity volatility and coupon uncertainty. In my view, the credit component is acceptable for most IG-oriented portfolios, but the equity-linked risk dominates valuation.
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ISSUER FREE WRITING PROSPECTUS Filed Pursuant to Rule 433 Registration Statement No. 333-282565 Dated July 10, 2025 |
Contingent Income Auto-Callable Securities due on or about July 21, 2028
Based on the Performance of the Common Stock of GE Vernova 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.
| SUMMARY TERMS | |
| Issuer: | The Bank of Nova Scotia |
| Issue: | Senior Note Program, Series A |
| Underlying stock: | Common stock of GE Vernova Inc. (Bloomberg Ticker: “GEV UN”) |
| Stated principal amount: | $1,000.00 per security |
| Minimum investment: | $1,000 (1 security) |
| Pricing date: | July 18, 2025 |
| Original issue date: | July 23, 2025 (3 business days after the pricing date; see preliminary pricing supplement). |
| Final determination date: | July 18, 2028, subject to postponement for certain market disruption events and as described in the accompanying product supplement. |
| Maturity date: | July 21, 2028, subject to postponement for certain market disruption events and as described in the accompanying product supplement. |
| 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. |
| 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. |
| 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 $31.25 (equivalent to 12.50% 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. |
| 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. |
| 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. |
| 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. |
| 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. |
| Share performance factor: | Final share price divided by the initial share price |
| 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 |
| 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 |
| 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. |
| 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 |
| CUSIP / ISIN: | 06419DAZ6 / US06419DAZ69 |
| Listing: | The securities will not be listed or displayed on any securities exchange or any electronic communications network. |
| Commission: | $22.50 per stated principal amount. |
| Estimated value on the pricing date: | Expected to be between $936.28 and $966.28 per security. See “Risk Factors” in the preliminary pricing supplement. |
| Preliminary pricing supplement: | http://www.sec.gov/Archives/edgar/data/9631/000183988225038188/bns_424b2-20818.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
|
Change in Underlying Stock |
Payment at Maturity (excluding any contingent quarterly coupon payable at maturity) |
|
+50.00% |
$1,000.00 |
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+40.00% |
$1,000.00 |
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+30.00% |
$1,000.00 |
|
+20.00% |
$1,000.00 |
|
+10.00% |
$1,000.00 |
|
0.00% |
$1,000.00 |
|
-10.00% |
$1,000.00 |
|
-20.00% |
$1,000.00 |
|
-30.00% |
$1,000.00 |
|
-40.00% |
$1,000.00 |
|
-50.00% |
$1,000.00 |
|
-51.00% |
$490.00 |
|
-60.00% |
$400.00 |
|
-70.00% |
$300.00 |
|
-80.00% |
$200.00 |
|
-90.00% |
$100.00 |
|
-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.
▪There is limited trading history for the underlying stock.
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 coupon rate for BNS Contingent Income Auto-Callable Securities?
When can the BNS securities be auto-called?
How is principal protected on these BNS notes?
What is the estimated value versus the issue price?
Are the notes listed on an exchange?
What credit risk do investors face?
