Bank of Nova Scotia SEC Filings

Bank of Nova Scotia (BNS) is marketing $1,000 face-value Contingent Income Auto-Callable Securities linked to Eli Lilly & Co. (LLY) common stock, maturing 16 July 2026. The notes are senior unsecured obligations issued under BNS’s Senior Note Program, Series A, and settle in T+3. They target income-oriented investors prepared to assume both issuer credit risk and equity market risk.

Key commercial terms

• Quarterly contingent coupon: $31.20 (12.48% p.a.) paid only when LLY’s closing price on the relevant determination date is ≥70% of the initial share price (the “downside threshold”). The “memory” feature allows previously missed coupons to be caught up if the threshold is later satisfied.
• Automatic redemption: If on any of the first three determination dates the LLY close ≥100% of the initial share price (the “call threshold”), the notes are redeemed at par plus the applicable coupon and any deferred coupons.
• Maturity settlement: • If final share price ≥70% of initial, holders receive par plus due coupons. • If <70%, holders receive a fixed number of LLY shares (exchange ratio = $1,000 ÷ initial share price) plus cash for any fractional share. This settlement could be worth far less than par, down to zero.
• Determination dates: 13 Oct 2025, 12 Jan 2026, 13 Apr 2026 and 13 Jul 2026 (final). Coupon payment dates fall three business days later, with the last one on maturity.
• Estimated issue-date value: $943.30 – $973.30, below the $1,000 offer price, reflecting selling concessions ($17.50 per note) and internal funding costs.
• Liquidity: No exchange listing; any secondary trading will be on a dealer basis through Scotia Capital (USA) Inc. and is expected to be limited.
• Credit: Payments depend entirely on BNS’s ability to pay; the notes are not deposit insured or CDIC bail-in-able.

Risk highlights

• Principal at risk: If LLY falls ≥30% by final observation, investors are exposed to share delivery and full downside below the initial price.
• Coupon uncertainty: Coupons are contingent; investors may receive few or none if LLY trades below the 70% barrier on observation dates.
• Early redemption risk: The note can be called as early as October 2025, limiting potential coupon accrual and forcing reinvestment at unknown rates.
• Valuation drag: Initial estimated value is up to 5.7% below issue price; bid/ask spreads and dealer fees may further reduce exit values.
• Limited secondary market and possible wide spreads reduce liquidity.

The product suits investors seeking enhanced yield and who hold a moderately bullish to neutral view on LLY over the next 12 months, while being comfortable with equity downside and BNS credit exposure. It is not appropriate for investors needing principal protection, guaranteed income, or ready liquidity.

The Bank of Nova Scotia (BNS) has filed a preliminary 424(b)(2) pricing supplement for $1,000-denomination Autocallable Contingent Buffered Return Enhanced Notes linked to the Nasdaq-100 Index (NDX). These three-year, senior unsecured notes expose investors to the credit risk of BNS and the market performance of the NDX while offering defined upside and downside formulas.

Key commercial terms

• Strike Date: 8 Jul 2025  | Trade Date: 9 Jul 2025  | Settlement (T+3): 14 Jul 2025
• Automatic Call: Triggered if the NDX closing value on the single Review Date (9 Jul 2027) is ≥ 100% of the Initial Value (22,702.25). If called, investors receive $1,215.80 per note (21.58% absolute return) and the trade terminates early.
• Upside at Maturity: If not called and the Final Value > Initial Value, payoff equals principal plus 150% participation in positive NDX return.
• Buffer Protection: A 10% downside buffer (Buffer Value 20,432.03). If Final Value is between 90% and 100% of the Initial Value, principal is returned.
• Downside Leverage: Below the Buffer, losses accelerate at ≈1.1111% per 1% additional decline, exposing investors to up to 100% capital loss.
• Coupon/Interest: None; the only cash flows are the call payment or the maturity payment.
• Initial Estimated Value: $940.81–$970.81 per $1,000 note, below the 100% issue price, reflecting selling costs and the Bank’s internal funding rate.
• Fees: 2.00% placement fee to JPMS/SCUSA (waived for fiduciary accounts); net proceeds to BNS 98% of face.
• Liquidity: Notes will not be listed; secondary market, if any, will be made at SCUSA’s discretion and may reflect sizable bid/ask spreads.

Risk highlights

• Credit risk: Payments depend on BNS’s ability to meet its obligations; the notes are not CDIC/FDIC insured.
• Market risk: A single observation of the NDX determines both the call and, if not called, the maturity payoff. Interim index moves offer no protection.
• Valuation risk: The internal pricing discount and limited liquidity may cause significant mark-to-market losses prior to the call/maturity dates.
• Reinvestment & early-call risk: Automatic call after two years could leave investors seeking comparable yield in a different rate environment.
• No income: Investors forego dividends on NDX constituents and receive no periodic coupons.

Overall, the notes offer amplified upside (150% participation) and a 10% buffer at the cost of full downside exposure beyond the buffer, no income, and issuer credit risk. The product is aimed at investors comfortable with equity volatility, early-termination uncertainty, and holding an illiquid structured note to maturity.