Bank of Nova Scotia Offers 6-Year Nasdaq-100 Autocallable Securities

Rhea-AI Filing Summary

The Bank of Nova Scotia (BNS) is offering Autocallable Strategic Accelerated Redemption Securities® linked to the Nasdaq-100 Index® (NDX). Each note has a $10 principal and may run up to approximately six years unless automatically redeemed. An automatic call occurs if the index’s closing level on any of the six scheduled annual Observation Dates is at or above the Call Level (100% of the Starting Value). In that event, investors receive a fixed Call Amount that increases yearly, beginning at $10.75-$10.85 in year one and reaching $14.50-$15.10 in year six (ranges to be finalized on the pricing date).

If the notes are not called, investors are fully exposed to downside: at maturity they incur a 1-for-1 loss on any decline in NDX below the Starting Value, risking full principal. The securities pay no periodic interest, are not exchange-listed, and their market value before maturity may be below both the public offering price and the issuer’s initial estimated value. All payments depend on the creditworthiness of BNS; a BNS default could result in total loss. Key risks highlighted include capped upside, lack of principal protection, secondary-market and liquidity risk, potential undervaluation at issuance, and exposure to non-U.S. equity performance. Full terms, tax considerations, and risk factors are provided in the SEC-filed preliminary offering documents (CIK 9631).

Positive

• Escalating fixed call premiums (7.5%-51% over six years) provide defined return potential if the Nasdaq-100 stays at or above the Starting Value on any observation date.
• Automatic call feature offers the possibility of early exit with a gain, reducing exposure duration.

Negative

• Full principal at risk; if the index is below the Starting Value at maturity, losses are 1-to-1 with no downside buffer.
• Capped upside; returns cannot exceed the predetermined Call Amount, limiting participation in strong equity rallies.
• Issuer credit risk; all payments depend on The Bank of Nova Scotia’s ability to pay.
• No exchange listing and uncertain liquidity could force investors to hold to call/maturity or sell at a discount.
• Initial estimated value below public offering price embeds underwriting fees and hedging costs, creating negative yield at issuance.

Insights

Structured Products Analyst

TL;DR: BNS offers six-year autocall notes with rising fixed premiums, but principal is fully at risk and upside is capped.

The term sheet outlines a standard autocall structure: annual observation, 100% trigger, and escalating call payouts. The call premium range (7.5%-51% cumulative) may appeal to investors anticipating flat-to-moderately positive NDX performance, yet the structure forfeits unlimited upside typical of an index strategy. Credit risk is solely that of BNS, and the initial estimated value being below issue price embeds dealer margin and hedging costs. From BNS’s perspective, issuing structured notes diversifies funding sources and generates fee income; however, the transaction size is not disclosed and therefore unlikely to be material to overall balance-sheet funding.

Risk Analyst

TL;DR: Investors face full downside exposure, illiquidity, credit risk and loss of principal protection.

The note’s risk profile is asymmetric: capped gains via fixed call premiums versus uncapped losses to 100%. Because the Call Level equals the Starting Value, a modest index decline postpones redemption, extending duration and price volatility. Non-listing and limited secondary markets further increase exit risk. Importantly, payments rely on BNS’s senior unsecured credit; any deterioration in BNS’s credit spreads directly affects mark-to-market values. For most portfolios this instrument should be classified as high-risk and illiquid, warranting suitability checks.

Filed Pursuant to Rule 433 Registration Statement No. 333-282565

AUTOCALLABLE STRATEGIC ACCELERATED REDEMPTION SECURITIES®

 

Autocallable Strategic Accelerated Redemption Securities® Linked to the Nasdaq-100 Index®
Issuer	The Bank of Nova Scotia (“BNS”)
Principal Amount	$10.00 per unit
Term	Approximately six years, if not called earlier
Market Measure	The Nasdaq-100 Index® (Bloomberg symbol: “NDX”)
Automatic Call	The notes will be called automatically if the Observation Level of the Market Measure on any of the Observation Dates is equal to or greater than the Call Level
Observation Level	The closing level of the Market Measure on any Observation Date
Observation Dates	Approximately one, two, three, four, five and six years from the pricing date
Call Level	100.00% of the Starting Value
Call Amounts	[$10.75 to $10.85] if called on the first Observation Date, [$11.50 to $11.70] if called on the second Observation Date, [$12.25 to $12.55] if called on the third Observation Date, [$13.00 to $13.40] if called on the fourth Observation Date, [$13.75 to $14.25] if called on the fifth Observation Date and [$14.50 to $15.10] if called on the final Observation Date, each to be determined on the pricing date
Payout Profile at Maturity	If the notes are not called, 1-to-1 downside exposure to decreases in the Market Measure, with up to 100.00% of your principal amount at risk
Threshold Value	100.00% of the Starting Value
Investment Considerations	This investment is designed for investors who anticipate that the Observation Level of the Market Measure on at least one of the Observation Dates will be equal to or greater than the Call Level and, in that case, are willing to have their notes called. This investment is also designed for investors who are willing to accept that their return on their investment will be capped at the applicable Call Premium, take full downside risk and forgo interim interest payments.
Preliminary Offering Documents	http://www.sec.gov/Archives/edgar/data/9631/000183988225038789/bns_fwp‐20909.htm
Exchange Listing	No
You should read the relevant Preliminary Offering Documents before you invest. Click on the Preliminary Offering Documents hyperlink above or call your Financial Advisor for a hard copy. Risk Factors Please see the Preliminary Offering Documents for a description of certain risks related to this investment, including, but not limited to, the following: ●If your notes are not automatically called, your investment will result in a loss; there is no guaranteed return of principal. ●Payments on the notes are subject to the credit risk of BNS, and actual or perceived changes in the creditworthiness of BNS are expected to affect the value of the notes. If BNS becomes insolvent or is unable to pay its obligations, you may lose your entire investment. ●The initial estimated value of the notes on the pricing date will be less than their public offering price. ●If you attempt to sell the notes prior to maturity, their market value may be lower than both the public offering price and the initial estimated value of the notes on the pricing date. ●If called, your return on the notes is limited to the applicable Call Premium. ●You will have no rights of a holder of the securities represented by the Market Measure, and you will not be entitled to receive securities or dividends or other distributions by the issuers of those securities. ●The notes are subject to risks associated with investments in securities linked to the value of non-U.S. equity securities. Final terms will be set on the pricing date within the given range for the specified Market-Linked Investment. Please see the Preliminary Offering Documents for complete product disclosure, including related risks and tax disclosure.

 

The Bank of Nova Scotia (“BNS”) has filed a registration statement (which includes a prospectus) with the U.S. Securities and Exchange Commission (SEC) for the notes that are described in this Guidebook. Before you invest, you should carefully read the prospectus in that registration statement and other documents that BNS has filed with the SEC for more complete information about BNS and any offering described in this Guidebook. You may obtain these documents without cost by visiting EDGAR on the SEC Website at www.sec.gov. BNS’s Central Index Key, or CIK, on the SEC website is 9631. Alternatively, Merrill Lynch will arrange to send you the prospectus and other documents relating to any offering described in this document if you so request by calling toll-free 1-800-294-1322. BNS faces risks that are specific to its business, and we encourage you to carefully consider these risks before making an investment in its securities.

 

FAQ

What is the maturity and potential term of the BNS Autocallable Strategic Accelerated Redemption Securities?

The notes have a maximum term of approximately six years, subject to earlier automatic redemption.

How do the automatic call levels work for BNS’s autocall notes?

If the Nasdaq-100 closes at or above 100% of the Starting Value on any annual Observation Date, the notes are called and investors receive the applicable fixed Call Amount.

What are the Call Amounts investors can earn on the BNS autocall notes?

Fixed payouts range from $10.75-$10.85 in year one up to $14.50-$15.10 in year six, finalized on the pricing date.

Is principal protected on the BNS Autocallable Securities?

No. If the notes are not called and the Nasdaq-100 is below the Starting Value at maturity, investors face dollar-for-dollar losses up to their entire principal.

What credit risk do investors assume with these BNS notes?

Payments rely on The Bank of Nova Scotia’s credit. An insolvency or inability to pay could result in total loss.

Are the BNS autocall notes listed on an exchange?

No. The securities are not exchange-listed, and secondary market liquidity may be limited.