Bank Nova Scotia SEC Filings

Bank of Nova Scotia (BNS) is marketing senior unsecured Contingent Income Auto-Callable Securities (Series A) linked to the common stock of Palantir Technologies Inc. (PLTR). The preliminary terms outline a three-year note (pricing date 18-Jul-2025, maturity 21-Jul-2028) with a $1,000 stated principal amount and the following key mechanics:

• Contingent quarterly coupon: $47.50 per note (19.00% p.a.) paid only when PLTR’s closing price on a determination date is ≥ 50% of the initial share price (“downside threshold”). A “memory” feature accrues missed coupons for later payment if the threshold is subsequently met.
• Automatic redemption (“auto-call”): If PLTR closes ≥ 100% of the initial share price (“call threshold”) on any quarterly determination date other than the final one, the note is redeemed for (i) principal + (ii) the current coupon + any unpaid memory coupons. Investors then forgo further payments.
• Principal at risk: At maturity, if the final share price is < 50% of the initial share price, investors receive principal multiplied by the share performance factor (final ÷ initial), exposing them to a 1-for-1 downside—potentially down to $0.
• No upside participation: Investors do not benefit from stock appreciation beyond receiving coupons; total return is coupon-driven.
• Credit exposure: Payments rely solely on BNS’s ability to pay; the notes are unsecured and unsubordinated. Estimated fair value at pricing (≈ $937.41–$967.41) is below the $1,000 issue price, reflecting selling and hedging costs.
• Liquidity & listing: The securities will not be listed on an exchange; secondary market making, if any, will be by Scotia Capital (USA) Inc. at its discretion.
• Underlying stock snapshot (09-Jul-2025): Price $143.13; 52-week range $24.09–$144.25. Historical data show significant volatility, a driver of the high coupon.

Investor implications: The structure targets yield-oriented investors willing to assume (1) high equity volatility, (2) potential loss of up to 100% of principal, (3) BNS credit risk, and (4) limited liquidity. The 19% headline coupon reflects these risks. Early redemption risk also creates reinvestment uncertainty. Prospective buyers should evaluate the trade-off between the elevated coupon and the substantial downside & credit exposures.

Bank of Nova Scotia (BNS) has filed a Free Writing Prospectus for Contingent Income Auto-Callable Securities linked to the common stock of Tesla, Inc. (TSLA), maturing on 21 Jul 2028. The notes are senior unsecured obligations of BNS and therefore subject to the bank’s credit risk.

Economic terms

• Denomination: $1,000 per note; minimum investment one note.
• Contingent coupon: $36.30 quarterly (14.52% p.a.) paid only if TSLA closes ≥ the 50 % downside threshold on the relevant determination date; missed coupons may be recovered later under the memory feature.
• Auto-call: If TSLA closes ≥ 100 % of the initial price on any quarterly determination date (other than final), the note is redeemed early for principal plus any due coupons.
• Payment at maturity: • If final price ≥ downside threshold, investors receive principal plus coupon(s). • If final price < downside threshold, repayment equals principal × (final/initial price), exposing investors to losses down to 0 % of principal.
• Pricing date: 18 Jul 2025; issue date: 23 Jul 2025.
• Estimated value: $937.95–$967.95 (3.2 %–6.2 % below issue price); commission: $22.50 per note.
• Notes will not be listed on an exchange; secondary liquidity, if any, will be limited and based on dealer pricing.

Key risks highlighted

• Full principal loss if TSLA falls more than 50 % by final determination.
• Coupons are contingent; investors may receive none.
• No upside participation: returns capped at received coupons.
• Credit risk of BNS; product is senior unsecured debt.
• Limited liquidity and estimated value below issue price.
• Tax treatment uncertain under U.S. and Canadian law.

Investors seeking high current income must weigh the attractive 14.52 % coupon against significant downside and liquidity risks.