[424B2] Royal Bank of Canada Prospectus Supplement
Royal Bank of Canada (RY) is offering three-year Barrier Digital Notes linked to the Class A common stock of The Trade Desk, Inc. (NASDAQ: TTD). The notes are senior unsecured obligations maturing 13 July 2028 and are issued under the bank’s Global Medium-Term Note programme.
Pay-off profile. For each $1,000 note:
- If the Final Underlier Value is ≥ 50 % of the Initial Value (the “Barrier Value”), investors receive principal plus a fixed Digital Return of 44 % ($1,440).
- If the Final Underlier Value is < 50 % of the Initial Value, repayment equals principal plus the actual Underlier Return, exposing investors to 1 % loss of principal for each 1 % decline in TTD below the initial level, down to total loss at –100 %.
Key terms. Trade Date 9 July 2025; Issue Date 14 July 2025; Valuation Date 10 July 2028; Minimum investment $1,000; CUSIP 78017PEB3; underwriter RBC Capital Markets. The initial estimated value is expected between $906 and $956, below the $1,000 offering price, reflecting underwriting discount (2.50 %) and hedging costs.
Risk highlights. Notes pay no periodic interest, are not listed, and are subject to RBC’s credit risk. Secondary market liquidity is expected to be limited and bid-ask spreads wide. The product embeds downside exposure below the 50 % barrier while capping upside at 44 %, meaning investors could underperform a direct equity investment. U.S. federal tax treatment is uncertain; the bank expects the notes to be treated as prepaid financial contracts.
Use of proceeds and conflicts. RBC receives 97.5 % of proceeds, using part to hedge its market exposure. RBCCM acts as calculation agent, creating potential conflicts of interest in valuation adjustments and market-making.
La Royal Bank of Canada (RY) offre Note Digitali Barrierate a tre anni collegate alle azioni ordinarie di Classe A di The Trade Desk, Inc. (NASDAQ: TTD). Le note sono obbligazioni senior non garantite con scadenza il 13 luglio 2028 e sono emesse nell’ambito del programma Global Medium-Term Note della banca.
Profilo di rendimento. Per ogni nota da $1.000:
- Se il Valore Finale del Sottostante è ≥ 50% del Valore Iniziale (la “Barriera”), gli investitori ricevono il capitale più un Rendimento Digitale fisso del 44% ($1.440).
- Se il Valore Finale del Sottostante è < 50% del Valore Iniziale, il rimborso corrisponde al capitale più il rendimento effettivo del sottostante, esponendo gli investitori a una perdita dell’1% del capitale per ogni 1% di calo del titolo TTD sotto il livello iniziale, fino alla perdita totale al -100%.
Termini chiave. Data di negoziazione 9 luglio 2025; Data di emissione 14 luglio 2025; Data di valutazione 10 luglio 2028; investimento minimo $1.000; CUSIP 78017PEB3; sottoscrittore RBC Capital Markets. Il valore stimato iniziale è compreso tra $906 e $956, inferiore al prezzo di offerta di $1.000, riflettendo lo sconto di sottoscrizione (2,50%) e i costi di copertura.
Rischi principali. Le note non pagano interessi periodici, non sono quotate e sono soggette al rischio di credito di RBC. La liquidità sul mercato secondario è prevista limitata con spread denaro-lettera ampi. Il prodotto incorpora un’esposizione al ribasso sotto la barriera del 50% e un limite al rialzo del 44%, quindi gli investitori potrebbero ottenere performance inferiori rispetto a un investimento diretto in azioni. Il trattamento fiscale federale USA è incerto; la banca prevede che le note saranno considerate contratti finanziari prepagati.
Utilizzo dei proventi e conflitti di interesse. RBC riceve il 97,5% dei proventi, utilizzandone parte per coprire l’esposizione di mercato. RBCCM agisce come agente di calcolo, generando potenziali conflitti di interesse nelle valutazioni e nel market-making.
Royal Bank of Canada (RY) ofrece Notas Digitales con Barrera a tres años vinculadas a las acciones ordinarias Clase A de The Trade Desk, Inc. (NASDAQ: TTD). Las notas son obligaciones senior no garantizadas con vencimiento el 13 de julio de 2028 y se emiten bajo el programa Global Medium-Term Note del banco.
Perfil de pago. Por cada nota de $1,000:
- Si el Valor Final del Subyacente es ≥ 50% del Valor Inicial (la “Barrera”), los inversores reciben el capital más un Retorno Digital fijo del 44% ($1,440).
- Si el Valor Final del Subyacente es < 50% del Valor Inicial, el reembolso equivale al capital más el rendimiento real del subyacente, exponiendo a los inversores a una pérdida del 1% del capital por cada 1% de caída de TTD por debajo del nivel inicial, hasta la pérdida total al –100%.
Términos clave. Fecha de negociación 9 de julio de 2025; Fecha de emisión 14 de julio de 2025; Fecha de valoración 10 de julio de 2028; inversión mínima $1,000; CUSIP 78017PEB3; suscriptor RBC Capital Markets. El valor estimado inicial se espera entre $906 y $956, por debajo del precio de oferta de $1,000, reflejando el descuento de suscripción (2.50%) y los costos de cobertura.
Aspectos de riesgo. Las notas no pagan intereses periódicos, no están listadas y están sujetas al riesgo crediticio de RBC. Se espera que la liquidez en el mercado secundario sea limitada y los diferenciales compra-venta amplios. El producto incorpora exposición a la baja por debajo de la barrera del 50% y limita la subida al 44%, lo que significa que los inversores podrían obtener un rendimiento inferior al de una inversión directa en acciones. El tratamiento fiscal federal de EE.UU. es incierto; el banco espera que las notas sean tratadas como contratos financieros prepagados.
Uso de los ingresos y conflictos. RBC recibe el 97.5% de los ingresos, usando parte para cubrir su exposición en el mercado. RBCCM actúa como agente de cálculo, creando posibles conflictos de interés en ajustes de valoración y en la creación de mercado.
로열 뱅크 오브 캐나다(RY)는 The Trade Desk, Inc. (NASDAQ: TTD)의 클래스 A 보통주에 연계된 3년 만기 배리어 디지털 노트를 제공합니다. 이 노트는 2028년 7월 13일 만기되는 선순위 무담보 채무이며, 은행의 글로벌 중기 채권 프로그램 하에 발행됩니다.
지급 구조. 각 $1,000 노트 기준:
- 최종 기초자산 가치가 초기 가치의 50% 이상인 경우(“배리어 가치”), 투자자는 원금과 고정된 44% 디지털 수익($1,440)을 받습니다.
- 최종 기초자산 가치가 초기 가치의 50% 미만인 경우, 상환금은 원금에 실제 기초자산 수익률을 더한 금액이며, 초기 수준 이하로 TTD가 1% 하락할 때마다 원금 1% 손실에 노출되어 -100%까지 전액 손실이 발생할 수 있습니다.
주요 조건. 거래일 2025년 7월 9일; 발행일 2025년 7월 14일; 평가일 2028년 7월 10일; 최소 투자금 $1,000; CUSIP 78017PEB3; 인수사 RBC 캐피털 마켓. 초기 예상 가치는 $906에서 $956 사이로, $1,000의 공모가보다 낮으며 인수 수수료(2.50%)와 헤지 비용이 반영된 것입니다.
위험 요약. 노트는 정기 이자를 지급하지 않으며, 상장되지 않고 RBC의 신용 위험에 노출됩니다. 2차 시장 유동성은 제한적이며 매수-매도 스프레드는 넓을 것으로 예상됩니다. 본 상품은 50% 배리어 아래에서 하락 위험을 내포하며 상승은 44%로 제한되어 있어 투자자가 직접 주식 투자보다 낮은 수익을 얻을 수 있습니다. 미국 연방 세금 처리는 불확실하며, 은행은 노트를 선불 금융 계약으로 취급할 것으로 예상합니다.
수익금 사용 및 이해 상충. RBC는 수익금의 97.5%를 수령하며 일부는 시장 노출 헤지에 사용합니다. RBCCM은 계산 대리인 역할을 하여 평가 조정 및 시장 조성에서 이해 상충 가능성이 존재합니다.
La Royal Bank of Canada (RY) propose des Notes Digitales Barrières à trois ans liées aux actions ordinaires de Classe A de The Trade Desk, Inc. (NASDAQ : TTD). Ces notes sont des obligations senior non garanties arrivant à échéance le 13 juillet 2028 et émises dans le cadre du programme Global Medium-Term Note de la banque.
Profil de remboursement. Pour chaque note de 1 000 $ :
- Si la valeur finale du sous-jacent est ≥ 50 % de la valeur initiale (la « valeur Barrière »), les investisseurs reçoivent le capital plus un rendement digital fixe de 44 % (1 440 $).
- Si la valeur finale du sous-jacent est < 50 % de la valeur initiale, le remboursement correspond au capital plus le rendement réel du sous-jacent, exposant les investisseurs à une perte de 1 % du capital pour chaque baisse de 1 % de TTD sous le niveau initial, jusqu’à une perte totale à –100 %.
Principaux termes. Date de négociation 9 juillet 2025 ; date d’émission 14 juillet 2025 ; date d’évaluation 10 juillet 2028 ; investissement minimum 1 000 $ ; CUSIP 78017PEB3 ; souscripteur RBC Capital Markets. La valeur estimée initiale est attendue entre 906 $ et 956 $, inférieure au prix d’offre de 1 000 $, reflétant la décote de souscription (2,50 %) et les coûts de couverture.
Points clés de risque. Les notes ne versent aucun intérêt périodique, ne sont pas cotées et sont soumises au risque de crédit de RBC. La liquidité sur le marché secondaire devrait être limitée avec des écarts acheteur-vendeur importants. Le produit intègre une exposition à la baisse sous la barrière de 50 % tout en plafonnant le potentiel de hausse à 44 %, ce qui signifie que les investisseurs pourraient sous-performer un investissement direct en actions. Le traitement fiscal fédéral américain est incertain ; la banque s’attend à ce que les notes soient considérées comme des contrats financiers prépayés.
Utilisation des fonds et conflits d’intérêts. RBC reçoit 97,5 % des fonds, en utilisant une partie pour couvrir son exposition au marché. RBCCM agit en tant qu’agent de calcul, créant des conflits d’intérêts potentiels dans les ajustements de valorisation et la tenue de marché.
Die Royal Bank of Canada (RY) bietet dreijährige Barrier Digital Notes an, die mit den Stammaktien der Klasse A von The Trade Desk, Inc. (NASDAQ: TTD) verbunden sind. Die Notes sind unbesicherte Seniorverbindlichkeiten mit Fälligkeit am 13. Juli 2028 und werden im Rahmen des Global Medium-Term Note-Programms der Bank ausgegeben.
Auszahlungsprofil. Für jede $1.000-Note:
- Wenn der Endwert des Basiswerts ≥ 50 % des Anfangswerts (die „Barriere“) liegt, erhalten Anleger das Kapital plus eine feste digitale Rendite von 44 % ($1.440).
- Liegt der Endwert des Basiswerts < 50 % des Anfangswerts, entspricht die Rückzahlung dem Kapital plus der tatsächlichen Rendite des Basiswerts, wodurch Anleger einem Verlust von 1 % des Kapitals für jeden 1 % Rückgang von TTD unter das Anfangsniveau ausgesetzt sind, bis hin zum Totalverlust bei –100 %.
Wesentliche Bedingungen. Handelstag 9. Juli 2025; Emissionstag 14. Juli 2025; Bewertungsstichtag 10. Juli 2028; Mindestanlage $1.000; CUSIP 78017PEB3; Zeichner RBC Capital Markets. Der anfänglich geschätzte Wert liegt voraussichtlich zwischen $906 und $956, unter dem Angebotspreis von $1.000, was den Zeichnungsabschlag (2,50 %) und die Absicherungskosten widerspiegelt.
Risikohinweise. Die Notes zahlen keine periodischen Zinsen, sind nicht börsennotiert und unterliegen dem Kreditrisiko von RBC. Die Liquidität am Sekundärmarkt wird voraussichtlich begrenzt sein, und die Geld-Brief-Spannen sind breit. Das Produkt beinhaltet ein Abwärtsrisiko unterhalb der 50 %-Barriere und begrenzt die Aufwärtschance auf 44 %, was bedeutet, dass Anleger eine schlechtere Performance als bei einer direkten Aktienanlage erzielen könnten. Die US-Bundessteuerbehandlung ist unklar; die Bank erwartet, dass die Notes als vorab bezahlte Finanzkontrakte behandelt werden.
Verwendung der Erlöse und Interessenkonflikte. RBC erhält 97,5 % der Erlöse und verwendet einen Teil davon zur Absicherung seiner Marktexponierung. RBCCM fungiert als Berechnungsstelle, was potenzielle Interessenkonflikte bei Bewertungsanpassungen und im Market Making schaffen kann.
- Fixed 44 % return if the Underlier remains ≥ 50 % of initial value, offering clear payoff visibility.
- Deep barrier allows moderate declines in TTD while still capturing the digital payout.
- Principal at risk; investors lose dollar-for-dollar below the 50 % barrier, up to total loss.
- No upside participation above 44 %, capping returns well below potential equity gains.
- Unsecured RBC credit exposure; repayment depends on the bank’s solvency.
- Illiquid secondary market; notes are not exchange-listed and may trade at steep discounts.
- Initial estimated value (≈ $906-$956) is materially below par, reflecting embedded fees.
Insights
TL;DR Capped 44 % upside, 50 % barrier downside, no coupons; credit and liquidity risk place product in high-risk, yield-enhancement category.
The notes provide a straightforward digital payoff: a fixed 44 % return if TTD closes at or above half its initial level in July 2028, regardless of how much the stock may have risen. This structure appeals to investors willing to forgo unlimited upside for conditional upside certainty. However, the 50 % barrier is deep-out-of-the-money today, meaning a moderate sell-off in TTD still delivers the 44 % return; the real risk is a severe drawdown below –50 %. Because the product is principal-at-risk and unsecured, investors face both market and RBC credit exposure. Initial fair value (≈ $931 midpoint) implies a 6.9 % embedded fee versus par—typical for retail structured notes. Absence of liquidity and potential wide bid-ask spreads further detract from risk-adjusted attractiveness. Overall impact on RBC is immaterial funding benefit; for noteholders, risk-reward is balanced but not compelling.
TL;DR Downside uncapped below –50 %; no interest; valuation discount; investors need high confidence in TTD stability and RBC credit.
From a portfolio-risk perspective, buyers assume three correlated risks: (1) single-stock concentration in a volatile ad-tech name; (2) issuer credit risk over three years; and (3) liquidity risk given no listing. Historical volatility of TTD (>45 %) suggests a non-trivial probability of breaching the 50 % barrier during market stress, which could lead to heavy capital loss. Meanwhile, the 44 % maximum gain equates to ~12.9 % CAGR, inferior to historical equity returns if TTD rallies sharply. The product is thus suited only for investors seeking a fixed conditional return and accepting significant tail risk. Impact on RY shares is negligible; issuance size is undisclosed but typically small relative to the bank’s balance sheet.
La Royal Bank of Canada (RY) offre Note Digitali Barrierate a tre anni collegate alle azioni ordinarie di Classe A di The Trade Desk, Inc. (NASDAQ: TTD). Le note sono obbligazioni senior non garantite con scadenza il 13 luglio 2028 e sono emesse nell’ambito del programma Global Medium-Term Note della banca.
Profilo di rendimento. Per ogni nota da $1.000:
- Se il Valore Finale del Sottostante è ≥ 50% del Valore Iniziale (la “Barriera”), gli investitori ricevono il capitale più un Rendimento Digitale fisso del 44% ($1.440).
- Se il Valore Finale del Sottostante è < 50% del Valore Iniziale, il rimborso corrisponde al capitale più il rendimento effettivo del sottostante, esponendo gli investitori a una perdita dell’1% del capitale per ogni 1% di calo del titolo TTD sotto il livello iniziale, fino alla perdita totale al -100%.
Termini chiave. Data di negoziazione 9 luglio 2025; Data di emissione 14 luglio 2025; Data di valutazione 10 luglio 2028; investimento minimo $1.000; CUSIP 78017PEB3; sottoscrittore RBC Capital Markets. Il valore stimato iniziale è compreso tra $906 e $956, inferiore al prezzo di offerta di $1.000, riflettendo lo sconto di sottoscrizione (2,50%) e i costi di copertura.
Rischi principali. Le note non pagano interessi periodici, non sono quotate e sono soggette al rischio di credito di RBC. La liquidità sul mercato secondario è prevista limitata con spread denaro-lettera ampi. Il prodotto incorpora un’esposizione al ribasso sotto la barriera del 50% e un limite al rialzo del 44%, quindi gli investitori potrebbero ottenere performance inferiori rispetto a un investimento diretto in azioni. Il trattamento fiscale federale USA è incerto; la banca prevede che le note saranno considerate contratti finanziari prepagati.
Utilizzo dei proventi e conflitti di interesse. RBC riceve il 97,5% dei proventi, utilizzandone parte per coprire l’esposizione di mercato. RBCCM agisce come agente di calcolo, generando potenziali conflitti di interesse nelle valutazioni e nel market-making.
Royal Bank of Canada (RY) ofrece Notas Digitales con Barrera a tres años vinculadas a las acciones ordinarias Clase A de The Trade Desk, Inc. (NASDAQ: TTD). Las notas son obligaciones senior no garantizadas con vencimiento el 13 de julio de 2028 y se emiten bajo el programa Global Medium-Term Note del banco.
Perfil de pago. Por cada nota de $1,000:
- Si el Valor Final del Subyacente es ≥ 50% del Valor Inicial (la “Barrera”), los inversores reciben el capital más un Retorno Digital fijo del 44% ($1,440).
- Si el Valor Final del Subyacente es < 50% del Valor Inicial, el reembolso equivale al capital más el rendimiento real del subyacente, exponiendo a los inversores a una pérdida del 1% del capital por cada 1% de caída de TTD por debajo del nivel inicial, hasta la pérdida total al –100%.
Términos clave. Fecha de negociación 9 de julio de 2025; Fecha de emisión 14 de julio de 2025; Fecha de valoración 10 de julio de 2028; inversión mínima $1,000; CUSIP 78017PEB3; suscriptor RBC Capital Markets. El valor estimado inicial se espera entre $906 y $956, por debajo del precio de oferta de $1,000, reflejando el descuento de suscripción (2.50%) y los costos de cobertura.
Aspectos de riesgo. Las notas no pagan intereses periódicos, no están listadas y están sujetas al riesgo crediticio de RBC. Se espera que la liquidez en el mercado secundario sea limitada y los diferenciales compra-venta amplios. El producto incorpora exposición a la baja por debajo de la barrera del 50% y limita la subida al 44%, lo que significa que los inversores podrían obtener un rendimiento inferior al de una inversión directa en acciones. El tratamiento fiscal federal de EE.UU. es incierto; el banco espera que las notas sean tratadas como contratos financieros prepagados.
Uso de los ingresos y conflictos. RBC recibe el 97.5% de los ingresos, usando parte para cubrir su exposición en el mercado. RBCCM actúa como agente de cálculo, creando posibles conflictos de interés en ajustes de valoración y en la creación de mercado.
로열 뱅크 오브 캐나다(RY)는 The Trade Desk, Inc. (NASDAQ: TTD)의 클래스 A 보통주에 연계된 3년 만기 배리어 디지털 노트를 제공합니다. 이 노트는 2028년 7월 13일 만기되는 선순위 무담보 채무이며, 은행의 글로벌 중기 채권 프로그램 하에 발행됩니다.
지급 구조. 각 $1,000 노트 기준:
- 최종 기초자산 가치가 초기 가치의 50% 이상인 경우(“배리어 가치”), 투자자는 원금과 고정된 44% 디지털 수익($1,440)을 받습니다.
- 최종 기초자산 가치가 초기 가치의 50% 미만인 경우, 상환금은 원금에 실제 기초자산 수익률을 더한 금액이며, 초기 수준 이하로 TTD가 1% 하락할 때마다 원금 1% 손실에 노출되어 -100%까지 전액 손실이 발생할 수 있습니다.
주요 조건. 거래일 2025년 7월 9일; 발행일 2025년 7월 14일; 평가일 2028년 7월 10일; 최소 투자금 $1,000; CUSIP 78017PEB3; 인수사 RBC 캐피털 마켓. 초기 예상 가치는 $906에서 $956 사이로, $1,000의 공모가보다 낮으며 인수 수수료(2.50%)와 헤지 비용이 반영된 것입니다.
위험 요약. 노트는 정기 이자를 지급하지 않으며, 상장되지 않고 RBC의 신용 위험에 노출됩니다. 2차 시장 유동성은 제한적이며 매수-매도 스프레드는 넓을 것으로 예상됩니다. 본 상품은 50% 배리어 아래에서 하락 위험을 내포하며 상승은 44%로 제한되어 있어 투자자가 직접 주식 투자보다 낮은 수익을 얻을 수 있습니다. 미국 연방 세금 처리는 불확실하며, 은행은 노트를 선불 금융 계약으로 취급할 것으로 예상합니다.
수익금 사용 및 이해 상충. RBC는 수익금의 97.5%를 수령하며 일부는 시장 노출 헤지에 사용합니다. RBCCM은 계산 대리인 역할을 하여 평가 조정 및 시장 조성에서 이해 상충 가능성이 존재합니다.
La Royal Bank of Canada (RY) propose des Notes Digitales Barrières à trois ans liées aux actions ordinaires de Classe A de The Trade Desk, Inc. (NASDAQ : TTD). Ces notes sont des obligations senior non garanties arrivant à échéance le 13 juillet 2028 et émises dans le cadre du programme Global Medium-Term Note de la banque.
Profil de remboursement. Pour chaque note de 1 000 $ :
- Si la valeur finale du sous-jacent est ≥ 50 % de la valeur initiale (la « valeur Barrière »), les investisseurs reçoivent le capital plus un rendement digital fixe de 44 % (1 440 $).
- Si la valeur finale du sous-jacent est < 50 % de la valeur initiale, le remboursement correspond au capital plus le rendement réel du sous-jacent, exposant les investisseurs à une perte de 1 % du capital pour chaque baisse de 1 % de TTD sous le niveau initial, jusqu’à une perte totale à –100 %.
Principaux termes. Date de négociation 9 juillet 2025 ; date d’émission 14 juillet 2025 ; date d’évaluation 10 juillet 2028 ; investissement minimum 1 000 $ ; CUSIP 78017PEB3 ; souscripteur RBC Capital Markets. La valeur estimée initiale est attendue entre 906 $ et 956 $, inférieure au prix d’offre de 1 000 $, reflétant la décote de souscription (2,50 %) et les coûts de couverture.
Points clés de risque. Les notes ne versent aucun intérêt périodique, ne sont pas cotées et sont soumises au risque de crédit de RBC. La liquidité sur le marché secondaire devrait être limitée avec des écarts acheteur-vendeur importants. Le produit intègre une exposition à la baisse sous la barrière de 50 % tout en plafonnant le potentiel de hausse à 44 %, ce qui signifie que les investisseurs pourraient sous-performer un investissement direct en actions. Le traitement fiscal fédéral américain est incertain ; la banque s’attend à ce que les notes soient considérées comme des contrats financiers prépayés.
Utilisation des fonds et conflits d’intérêts. RBC reçoit 97,5 % des fonds, en utilisant une partie pour couvrir son exposition au marché. RBCCM agit en tant qu’agent de calcul, créant des conflits d’intérêts potentiels dans les ajustements de valorisation et la tenue de marché.
Die Royal Bank of Canada (RY) bietet dreijährige Barrier Digital Notes an, die mit den Stammaktien der Klasse A von The Trade Desk, Inc. (NASDAQ: TTD) verbunden sind. Die Notes sind unbesicherte Seniorverbindlichkeiten mit Fälligkeit am 13. Juli 2028 und werden im Rahmen des Global Medium-Term Note-Programms der Bank ausgegeben.
Auszahlungsprofil. Für jede $1.000-Note:
- Wenn der Endwert des Basiswerts ≥ 50 % des Anfangswerts (die „Barriere“) liegt, erhalten Anleger das Kapital plus eine feste digitale Rendite von 44 % ($1.440).
- Liegt der Endwert des Basiswerts < 50 % des Anfangswerts, entspricht die Rückzahlung dem Kapital plus der tatsächlichen Rendite des Basiswerts, wodurch Anleger einem Verlust von 1 % des Kapitals für jeden 1 % Rückgang von TTD unter das Anfangsniveau ausgesetzt sind, bis hin zum Totalverlust bei –100 %.
Wesentliche Bedingungen. Handelstag 9. Juli 2025; Emissionstag 14. Juli 2025; Bewertungsstichtag 10. Juli 2028; Mindestanlage $1.000; CUSIP 78017PEB3; Zeichner RBC Capital Markets. Der anfänglich geschätzte Wert liegt voraussichtlich zwischen $906 und $956, unter dem Angebotspreis von $1.000, was den Zeichnungsabschlag (2,50 %) und die Absicherungskosten widerspiegelt.
Risikohinweise. Die Notes zahlen keine periodischen Zinsen, sind nicht börsennotiert und unterliegen dem Kreditrisiko von RBC. Die Liquidität am Sekundärmarkt wird voraussichtlich begrenzt sein, und die Geld-Brief-Spannen sind breit. Das Produkt beinhaltet ein Abwärtsrisiko unterhalb der 50 %-Barriere und begrenzt die Aufwärtschance auf 44 %, was bedeutet, dass Anleger eine schlechtere Performance als bei einer direkten Aktienanlage erzielen könnten. Die US-Bundessteuerbehandlung ist unklar; die Bank erwartet, dass die Notes als vorab bezahlte Finanzkontrakte behandelt werden.
Verwendung der Erlöse und Interessenkonflikte. RBC erhält 97,5 % der Erlöse und verwendet einen Teil davon zur Absicherung seiner Marktexponierung. RBCCM fungiert als Berechnungsstelle, was potenzielle Interessenkonflikte bei Bewertungsanpassungen und im Market Making schaffen kann.
 |
Registration Statement No. 333-275898 Filed Pursuant to Rule 424(b)(2) |
| The information in this preliminary pricing supplement is not complete and may be changed. | |
|
Preliminary Pricing Supplement Subject to Completion: Dated July 3, 2025 Pricing Supplement dated July __, 2025 to the Prospectus dated December 20, 2023, the Prospectus Supplement dated December 20, 2023 and the Product Supplement No. 1A dated May 16, 2024 |
$
Royal Bank of Canada | |
Royal Bank of Canada is offering Barrier Digital Notes (the “Notes”) linked to the performance of the Class A common stock of The Trade Desk, Inc. (the “Underlier”).
| · | Contingent Fixed Return — If the Final Underlier Value is greater than or equal to the Barrier Value (50% of the Initial Underlier Value), at maturity, investors will receive a fixed return equal to the Digital Return of 44%. |
| · | Principal at Risk — If the Final Underlier Value is less than the Barrier Value, at maturity, investors will lose 1% of the principal amount of their Notes for each 1% that the Final Underlier Value is less than the Initial Underlier Value. |
| · | The Notes do not pay interest. |
| · | Any payments on the Notes are subject to our credit risk. |
| · | The Notes will not be listed on any securities exchange. |
CUSIP: 78017PEB3
Investing in the Notes involves a number of risks. See “Selected Risk Considerations” beginning on page P-6 of this pricing supplement and “Risk Factors” in the accompanying prospectus, prospectus supplement and product supplement.
None of the Securities and Exchange Commission (the “SEC”), any state securities commission or any other regulatory body has approved or disapproved of the Notes or passed upon the adequacy or accuracy of this pricing supplement. Any representation to the contrary is a criminal offense. The Notes will not constitute deposits insured by the Canada Deposit Insurance Corporation, the U.S. Federal Deposit Insurance Corporation or any other Canadian or U.S. governmental agency or instrumentality. The Notes are not bail-inable notes and are not subject to conversion into our common shares under subsection 39.2(2.3) of the Canada Deposit Insurance Corporation Act.
|
Per Note |
Total | |
| Price to public(1) | 100.00% | $ |
| Underwriting discounts and commissions(1) |
2.50% |
$ |
| Proceeds to Royal Bank of Canada | 97.50% | $ |
(1) We or one of our affiliates may pay varying selling concessions of up to $25.00 per $1,000 principal amount of Notes in connection with the distribution of the Notes to other registered broker-dealers. Certain dealers who purchase the Notes for sale to certain fee-based advisory accounts may forgo some or all of their underwriting discount or selling concessions. The public offering price for investors purchasing the Notes in these accounts may be between $975.00 and $1,000.00 per $1,000 principal amount of Notes. See “Supplemental Plan of Distribution (Conflicts of Interest)” below.
The initial estimated value of the Notes determined by us as of the Trade Date, which we refer to as the initial estimated value, is expected to be between $906.00 and $956.00 per $1,000 principal amount of Notes and will be less than the public offering price of the Notes. The final pricing supplement relating to the Notes will set forth the initial estimated value. The market value of the Notes at any time will reflect many factors, cannot be predicted with accuracy and may be less than this amount. We describe the determination of the initial estimated value in more detail below.
RBC Capital Markets, LLC
| Barrier Digital Notes Linked to the Class A Common Stock of The Trade Desk, Inc. |
KEY TERMS
The information in this “Key Terms” section is qualified by any more detailed information set forth in this pricing supplement and in the accompanying prospectus, prospectus supplement and product supplement.
| Issuer: | Royal Bank of Canada |
| Underwriter: | RBC Capital Markets, LLC (“RBCCM”) |
| Minimum Investment: | $1,000 and minimum denominations of $1,000 in excess thereof |
| Underlier: | The Class A common stock of The Trade Desk, Inc. |
| Bloomberg Ticker | Initial Underlier Value(1) | Barrier Value(2) | |
| TTD UW | $ | $ |
| (1) The closing value of the Underlier on the Trade Date | |
| (2) 50% of the Initial Underlier Value (rounded to two decimal places) | |
| Trade Date: | July 9, 2025 |
| Issue Date: | July 14, 2025 |
| Valuation Date:* | July 10, 2028 |
| Maturity Date:* | July 13, 2028 |
| Payment at Maturity: |
Investors will receive on the Maturity Date per $1,000 principal amount of Notes: · If the Final Underlier Value is greater than or equal to the Barrier Value, an amount equal to: $1,000 + ($1,000 × Digital Return) · If the Final Underlier Value is less than the Barrier Value, an amount equal to: $1,000 + ($1,000 × Underlier Return) If the Final Underlier Value is less than the Barrier Value, you will lose a substantial portion or all of your principal amount at maturity. All payments on the Notes are subject to our credit risk. |
| Digital Return: | 44% |
| Underlier Return: |
The Underlier Return, expressed as a percentage, is calculated using the following formula: Final Underlier Value – Initial Underlier
Value |
| Final Underlier Value: | The closing value of the Underlier on the Valuation Date |
| Calculation Agent: | RBCCM |
* Subject to postponement. See “General Terms of the Notes—Postponement of a Determination Date” and “General Terms of the Notes—Postponement of a Payment Date” in the accompanying product supplement.
| P-2 | RBC Capital Markets, LLC |
| Barrier Digital Notes Linked to the Class A Common Stock of The Trade Desk, Inc. |
ADDITIONAL TERMS OF YOUR NOTES
You should read this pricing supplement together with the prospectus dated December 20, 2023, as supplemented by the prospectus supplement dated December 20, 2023, relating to our Senior Global Medium-Term Notes, Series J, of which the Notes are a part, and the product supplement no. 1A dated May 16, 2024. This pricing supplement, together with these documents, contains the terms of the Notes and supersedes all other prior or contemporaneous oral statements as well as any other written materials, including preliminary or indicative pricing terms, correspondence, trade ideas, structures for implementation, sample structures, fact sheets, brochures or other educational materials of ours.
We have not authorized anyone to provide any information or to make any representations other than those contained or incorporated by reference in this pricing supplement and the documents listed below. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. These documents are an offer to sell only the Notes offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. The information contained in each such document is current only as of its date.
If the information in this pricing supplement differs from the information contained in the documents listed below, you should rely on the information in this pricing supplement.
You should carefully consider, among other things, the matters set forth in “Selected Risk Considerations” in this pricing supplement and “Risk Factors” in the documents listed below, as the Notes involve risks not associated with conventional debt securities. We urge you to consult your investment, legal, tax, accounting and other advisers before you invest in the Notes.
You may access these documents on the SEC website at www.sec.gov as follows (or if such address has changed, by reviewing our filings for the relevant date on the SEC website):
| · | Prospectus dated December 20, 2023: |
https://www.sec.gov/Archives/edgar/data/1000275/000119312523299520/d645671d424b3.htm
| · | Prospectus Supplement dated December 20, 2023: |
https://www.sec.gov/Archives/edgar/data/1000275/000119312523299523/d638227d424b3.htm
| · | Product Supplement No. 1A dated May 16, 2024: |
https://www.sec.gov/Archives/edgar/data/1000275/000095010324006777/dp211286_424b2-ps1a.htm
Our Central Index Key, or CIK, on the SEC website is 1000275. As used in this pricing supplement, “Royal Bank of Canada,” the “Bank,” “we,” “our” and “us” mean only Royal Bank of Canada.
| P-3 | RBC Capital Markets, LLC |
| Barrier Digital Notes Linked to the Class A Common Stock of The Trade Desk, Inc. |
HYPOTHETICAL RETURNS
The table and examples set forth below illustrate hypothetical payments at maturity for hypothetical performance of the Underlier, based on the Barrier Value of 50% of the Initial Underlier Value and the Digital Return of 44%. The table and examples are only for illustrative purposes and may not show the actual return applicable to investors.
| Hypothetical Underlier Return | Payment at Maturity per $1,000 Principal Amount of Notes | Payment at Maturity as Percentage of Principal Amount |
| 70.00% | $1,440.00 | 144.000% |
| 60.00% | $1,440.00 | 144.000% |
| 50.00% | $1,440.00 | 144.000% |
| 44.00% | $1,440.00 | 144.000% |
| 40.00% | $1,440.00 | 144.000% |
| 30.00% | $1,440.00 | 144.000% |
| 20.00% | $1,440.00 | 144.000% |
| 10.00% | $1,440.00 | 144.000% |
| 5.00% | $1,440.00 | 144.000% |
| 2.00% | $1,440.00 | 144.000% |
| 0.00% | $1,440.00 | 144.000% |
| -5.00% | $1,440.00 | 144.000% |
| -10.00% | $1,440.00 | 144.000% |
| -20.00% | $1,440.00 | 144.000% |
| -30.00% | $1,440.00 | 144.000% |
| -40.00% | $1,440.00 | 144.000% |
| -50.00% | $1,440.00 | 144.000% |
| -50.01% | $499.90 | 49.990% |
| -60.00% | $400.00 | 40.000% |
| -70.00% | $300.00 | 30.000% |
| -80.00% | $200.00 | 20.000% |
| -90.00% | $100.00 | 10.000% |
| -100.00% | $0.00 | 0.000% |
| Example 1 — | The value of the Underlier increases from the Initial Underlier Value to the Final Underlier Value by 2%, resulting in a return equal to the Digital Return. | |
| Underlier Return: | 2% | |
| Payment at Maturity: | $1,000 + ($1,000 × 44%) = $1,000 + $440 = $1,440 | |
| In this example, the payment at maturity is $1,440 per $1,000 principal amount of Notes, for a return of 44%, which is the Digital Return. Because the Final Underlier Value is greater than or equal to the Barrier Value, investors receive a return equal to the Digital Return. | ||
| P-4 | RBC Capital Markets, LLC |
| Barrier Digital Notes Linked to the Class A Common Stock of The Trade Desk, Inc. |
| Example 2 — | The value of the Underlier increases from the Initial Underlier Value to the Final Underlier Value by 60%, resulting in a return equal to the Digital Return. | |
| Underlier Return: | 60% | |
| Payment at Maturity: | $1,000 + ($1,000 × 44%) = $1,000 + $440 = $1,440 | |
| In this example, the payment at maturity is $1,440 per $1,000 principal amount of Notes, for a return of 44%, which is the Digital Return. Because the Final Underlier Value is greater than or equal to the Barrier Value, investors receive a return equal to the Digital Return. This example illustrates that investors will not receive a return at maturity in excess of the Digital Return. Accordingly, the return on the Notes may be less than the return of the Underlier. | ||
| Example 3 — | The value of the Underlier decreases from the Initial Underlier Value to the Final Underlier Value by 10% (i.e., the Final Underlier Value is below the Initial Underlier Value but above the Barrier Value), resulting in a return equal to the Digital Return. | |
| Underlier Return: | -10% | |
| Payment at Maturity: | $1,000 + ($1,000 × 44%) = $1,000 + $440 = $1,440 | |
| In this example, the payment at maturity is $1,440 per $1,000 principal amount of Notes, for a return of 44%, which is the Digital Return. Because the Final Underlier Value is greater than or equal to the Barrier Value, even though the Underlier Return is negative, investors receive a return equal to the Digital Return. | ||
| Example 4 — | The value of the Underlier decreases from the Initial Underlier Value to the Final Underlier Value by 60% (i.e., the Final Underlier Value is below the Barrier Value). | |
| Underlier Return: | -60% | |
| Payment at Maturity: | $1,000 + ($1,000 × -60%) = $1,000 – $600 = $400 | |
| In this example, the payment at maturity is $400 per $1,000 principal amount of Notes, representing a loss of 60% of the principal amount. Because the Final Underlier Value is less than the Barrier Value, investors do not receive a full return of the principal amount of their Notes. | ||
Investors in the Notes could lose a substantial portion or all of the principal amount of their Notes at maturity.
| P-5 | RBC Capital Markets, LLC |
| Barrier Digital Notes Linked to the Class A Common Stock of The Trade Desk, Inc. |
SELECTED RISK CONSIDERATIONS
An investment in the Notes involves significant risks. We urge you to consult your investment, legal, tax, accounting and other advisers before you invest in the Notes. Some of the risks that apply to an investment in the Notes are summarized below, but we urge you to read also the “Risk Factors” sections of the accompanying prospectus, prospectus supplement and product supplement. You should not purchase the Notes unless you understand and can bear the risks of investing in the Notes.
Risks Relating to the Terms and Structure of the Notes
| · | You May Lose a Portion or All of the Principal Amount at Maturity — If the Final Underlier Value is less than the Barrier Value, you will lose 1% of the principal amount of your Notes for each 1% that the Final Underlier Value is less than the Initial Underlier Value. You could lose a substantial portion or all of your principal amount at maturity. |
| · | Your Potential Return at Maturity Is Limited — Your return on the Notes will not exceed the Digital Return, regardless of any appreciation in the value of the Underlier, which may be significant. Accordingly, your return on the Notes may be less than your return would be if you made an investment in a security directly linked to the positive performance of the Underlier. |
| · | The Notes Do Not Pay Interest, and Your Return on the Notes May Be Lower Than the Return on a Conventional Debt Security of Comparable Maturity — There will be no periodic interest payments on the Notes as there would be on a conventional fixed-rate or floating-rate debt security having the same maturity. The return that you will receive on the Notes, which could be negative, may be less than the return you could earn on other investments. Even if your return is positive, your return may be less than the return you would earn if you purchased one of our conventional senior interest-bearing debt securities. |
| · | Payments on the Notes Are Subject to Our Credit Risk, and Market Perceptions about Our Creditworthiness May Adversely Affect the Market Value of the Notes — The Notes are our senior unsecured debt securities, and your receipt of any amounts due on the Notes is dependent upon our ability to pay our obligations as they come due. If we were to default on our payment obligations, you may not receive any amounts owed to you under the Notes and you could lose your entire investment. In addition, any negative changes in market perceptions about our creditworthiness may adversely affect the market value of the Notes. |
| · | Any Payment on the Notes Will Be Determined Based on the Closing Values of the Underlier on the Dates Specified — Any payment on the Notes will be determined based on the closing values of the Underlier on the dates specified. You will not benefit from any more favorable value of the Underlier determined at any other time. |
| · | The U.S. Federal Income Tax Consequences of an Investment in the Notes Are Uncertain — There is no direct legal authority regarding the proper U.S. federal income tax treatment of the Notes, and significant aspects of the tax treatment of the Notes are uncertain. You should review carefully the section entitled “United States Federal Income Tax Considerations” herein, in combination with the section entitled “United States Federal Income Tax Considerations” in the accompanying product supplement, and consult your tax adviser regarding the U.S. federal income tax consequences of an investment in the Notes. |
Risks Relating to the Initial Estimated Value of the Notes and the Secondary Market for the Notes
| · | There May Not Be an Active Trading Market for the Notes; Sales in the Secondary Market May Result in Significant Losses — There may be little or no secondary market for the Notes. The Notes will not be listed on any securities exchange. RBCCM and our other affiliates may make a market for the Notes; however, they are not required to do so and, if they choose to do so, may stop any market-making activities at any time. Because other dealers are not likely to make a secondary market for the Notes, the price at which you may be able to trade your Notes is likely to depend on the price, if any, at which RBCCM or any of our other affiliates is willing to buy the Notes. Even if a secondary market for the Notes develops, it may not provide enough liquidity to allow you to easily trade or sell the Notes. We expect that transaction costs in any secondary market would be high. As a result, the difference between bid and ask |
| P-6 | RBC Capital Markets, LLC |
| Barrier Digital Notes Linked to the Class A Common Stock of The Trade Desk, Inc. |
prices for your Notes in any secondary market could be substantial. If you sell your Notes before maturity, you may have to do so at a substantial discount from the price that you paid for them, and as a result, you may suffer significant losses. The Notes are not designed to be short-term trading instruments. Accordingly, you should be able and willing to hold your Notes to maturity.
| · | The Initial Estimated Value of the Notes Will Be Less Than the Public Offering Price — The initial estimated value of the Notes will be less than the public offering price of the Notes and does not represent a minimum price at which we, RBCCM or any of our other affiliates would be willing to purchase the Notes in any secondary market (if any exists) at any time. If you attempt to sell the Notes prior to maturity, their market value may be lower than the price you paid for them and the initial estimated value. This is due to, among other things, changes in the value of the Underlier, the internal funding rate we pay to issue securities of this kind (which is lower than the rate at which we borrow funds by issuing conventional fixed rate debt) and the inclusion in the public offering price of the underwriting discount, our estimated profit and the estimated costs relating to our hedging of the Notes. These factors, together with various credit, market and economic factors over the term of the Notes, are expected to reduce the price at which you may be able to sell the Notes in any secondary market and will affect the value of the Notes in complex and unpredictable ways. Assuming no change in market conditions or any other relevant factors, the price, if any, at which you may be able to sell your Notes prior to maturity may be less than your original purchase price, as any such sale price would not be expected to include the underwriting discount, our estimated profit or the hedging costs relating to the Notes. In addition, any price at which you may sell the Notes is likely to reflect customary bid-ask spreads for similar trades. In addition to bid-ask spreads, the value of the Notes determined for any secondary market price is expected to be based on a secondary market rate rather than the internal funding rate used to price the Notes and determine the initial estimated value. As a result, the secondary market price will be less than if the internal funding rate were used. |
| · | The Initial Estimated Value of the Notes Is Only an Estimate, Calculated as of the Trade Date — The initial estimated value of the Notes is based on the value of our obligation to make the payments on the Notes, together with the mid-market value of the derivative embedded in the terms of the Notes. See “Structuring the Notes” below. Our estimate is based on a variety of assumptions, including our internal funding rate (which represents a discount from our credit spreads), expectations as to dividends, interest rates and volatility and the expected term of the Notes. These assumptions are based on certain forecasts about future events, which may prove to be incorrect. Other entities may value the Notes or similar securities at a price that is significantly different than we do. |
The value of the Notes at any time after the Trade Date will vary based on many factors, including changes in market conditions, and cannot be predicted with accuracy. As a result, the actual value you would receive if you sold the Notes in any secondary market, if any, should be expected to differ materially from the initial estimated value of the Notes.
Risks Relating to Conflicts of Interest and Our Trading Activities
| · | Our and Our Affiliates’ Business and Trading Activities May Create Conflicts of Interest — You should make your own independent investigation of the merits of investing in the Notes. Our and our affiliates’ economic interests are potentially adverse to your interests as an investor in the Notes due to our and our affiliates’ business and trading activities, and we and our affiliates have no obligation to consider your interests in taking any actions that might affect the value of the Notes. Trading by us and our affiliates may adversely affect the value of the Underlier and the market value of the Notes. See “Risk Factors—Risks Relating to Conflicts of Interest” in the accompanying product supplement. |
| · | RBCCM’s Role as Calculation Agent May Create Conflicts of Interest — As Calculation Agent, our affiliate, RBCCM, will determine any values of the Underlier and make any other determinations necessary to calculate any payments on the Notes. In making these determinations, the Calculation Agent may be required to make discretionary judgments, including those described under “—Risks Relating to the Underlier” below. In making these discretionary judgments, the economic interests of the Calculation Agent are potentially adverse to your interests as an investor in the Notes, and any of these determinations may adversely affect any payments on the Notes. The Calculation Agent will have no obligation to consider your interests as an investor in the Notes in making any determinations with respect to the Notes. |
| P-7 | RBC Capital Markets, LLC |
| Barrier Digital Notes Linked to the Class A Common Stock of The Trade Desk, Inc. |
Risks Relating to the Underlier
| · | You Will Not Have Any Rights to the Underlier — As an investor in the Notes, you will not have voting rights or rights to receive dividends or other distributions or any other rights with respect to the Underlier. |
| · | Any Payment on the Notes May Be Postponed and Adversely Affected by the Occurrence of a Market Disruption Event — The timing and amount of any payment on the Notes is subject to adjustment upon the occurrence of a market disruption event affecting the Underlier. If a market disruption event persists for a sustained period, the Calculation Agent may make a discretionary determination of the closing value of the Underlier. See “General Terms of the Notes—Reference Stocks and Funds—Market Disruption Events,” “General Terms of the Notes—Postponement of a Determination Date” and “General Terms of the Notes—Postponement of a Payment Date” in the accompanying product supplement. |
| · | Anti-dilution Protection Is Limited, and the Calculation Agent Has Discretion to Make Anti-dilution Adjustments — The Calculation Agent may in its sole discretion make adjustments affecting any amounts payable on the Notes upon the occurrence of certain corporate events (such as stock splits or extraordinary or special dividends) that the Calculation Agent determines have a diluting or concentrative effect on the theoretical value of the Underlier. However, the Calculation Agent might not make adjustments in response to all such events that could affect the Underlier. The occurrence of any such event and any adjustment made by the Calculation Agent (or a determination by the Calculation Agent not to make any adjustment) may adversely affect the market price of, and any amounts payable on, the Notes. See “General Terms of the Notes—Reference Stocks and Funds—Anti-dilution Adjustments” in the accompanying product supplement. |
| · | Reorganization or Other Events Could Adversely Affect the Value of the Notes or Result in the Notes Being Accelerated — Upon the occurrence of certain reorganization or other events affecting the Underlier, the Calculation Agent may make adjustments that result in payments on the Notes being based on the performance of (i) cash, securities of another issuer and/or other property distributed to holders of the Underlier upon the occurrence of that event or (ii) in the case of a reorganization event in which only cash is distributed to holders of the Underlier, a substitute security, if the Calculation Agent elects to select one. Any of these actions could adversely affect the value of the Underlier and, consequently, the value of the Notes. Alternatively, the Calculation Agent may accelerate the Maturity Date for a payment determined by the Calculation Agent. Any amount payable upon acceleration could be significantly less than any amount that would be due on the Notes if they were not accelerated. However, if the Calculation Agent elects not to accelerate the Notes, the value of, and any amount payable on, the Notes could be adversely affected, perhaps significantly. See “General Terms of the Notes—Reference Stocks and Funds—Anti-dilution Adjustments—Reorganization Events” in the accompanying product supplement. |
| P-8 | RBC Capital Markets, LLC |
| Barrier Digital Notes Linked to the Class A Common Stock of The Trade Desk, Inc. |
INFORMATION REGARDING THE UNDERLIER
The Underlier is registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Companies with securities registered under the Exchange Act are required to file financial and other information specified by the SEC periodically. Information provided to or filed with the SEC by the issuer of the Underlier can be located on a website maintained by the SEC at https://www.sec.gov by reference to that issuer’s SEC file number provided below. Information from outside sources is not incorporated by reference in, and should not be considered part of, this pricing supplement. We have not independently verified the accuracy or completeness of the information contained in outside sources.
According to publicly available information, The Trade Desk, Inc. offers a self-service, cloud-based ad-buying platform.
The issuer of the Underlier’s SEC file number is 001-37879. The Underlier is listed on The Nasdaq Stock Market under the ticker symbol “TTD.”
Historical Information
The following graph sets forth historical closing values of the Underlier for the period from September 21, 2016 to July 1, 2025. The red line represents a hypothetical Barrier Value based on the closing value of the Underlier on July 1, 2025. We obtained the information in the graph from Bloomberg Financial Markets, without independent investigation. We cannot give you assurance that the performance of the Underlier will result in the return of all of your initial investment.
Class A Common Stock of The Trade Desk, Inc.
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
| P-9 | RBC Capital Markets, LLC |
| Barrier Digital Notes Linked to the Class A Common Stock of The Trade Desk, Inc. |
UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
You should review carefully the section in the accompanying product supplement entitled “United States Federal Income Tax Considerations.” The following discussion, when read in combination with that section, constitutes the full opinion of our counsel, Davis Polk & Wardwell LLP, regarding the material U.S. federal income tax consequences of owning and disposing of the Notes.
Generally, this discussion assumes that you purchased the Notes for cash in the original issuance at the stated issue price and does not address other circumstances specific to you, including consequences that may arise due to any other investments relating to the Underlier. You should consult your tax adviser regarding the effect any such circumstances may have on the U.S. federal income tax consequences of your ownership of a Note.
In the opinion of our counsel, which is based on current market conditions, it is reasonable to treat the Notes for U.S. federal income tax purposes as prepaid financial contracts that are “open transactions,” as described in the section entitled “United States Federal Income Tax Considerations—Tax Consequences to U.S. Holders—Notes Treated as Prepaid Financial Contracts that are Open Transactions” in the accompanying product supplement. There is uncertainty regarding this treatment, and the Internal Revenue Service (the “IRS”) or a court might not agree with it. Moreover, because this treatment of the Notes and our counsel’s opinion are based on market conditions as of the date of this preliminary pricing supplement, each is subject to confirmation on the Trade Date. A different tax treatment could be adverse to you. Generally, if this treatment is respected, (i) you should not recognize taxable income or loss prior to the taxable disposition of your Notes (including upon maturity or an earlier redemption, if applicable) and (ii) the gain or loss on your Notes should be treated as short-term capital gain or loss unless you have held the Notes for more than one year, in which case your gain or loss should be treated as long-term capital gain or loss.
We do not plan to request a ruling from the IRS regarding the treatment of the Notes. An alternative characterization of the Notes could materially and adversely affect the tax consequences of ownership and disposition of the Notes, including the timing and character of income recognized. In addition, the U.S. Treasury Department and the IRS have requested comments on various issues regarding the U.S. federal income tax treatment of “prepaid forward contracts” and similar financial instruments and have indicated that such transactions may be the subject of future regulations or other guidance. Furthermore, members of Congress have proposed legislative changes to the tax treatment of derivative contracts. Any legislation, Treasury regulations or other guidance promulgated after consideration of these issues could materially and adversely affect the tax consequences of an investment in the Notes, possibly with retroactive effect.
Non-U.S. Holders. As discussed under “United States Federal Income Tax Considerations—Tax Consequences to Non-U.S. Holders—Dividend Equivalents under Section 871(m) of the Code” in the accompanying product supplement, Section 871(m) of the Internal Revenue Code and Treasury regulations promulgated thereunder (“Section 871(m)”) generally impose a 30% withholding tax on dividend equivalents paid or deemed paid to Non-U.S. Holders with respect to certain financial instruments linked to U.S. equities or indices that include U.S. equities. The Treasury regulations, as modified by an IRS notice, exempt financial instruments issued prior to January 1, 2027 that do not have a “delta” of one. Based on certain determinations made by us, we expect that Section 871(m) will not apply to the Notes with regard to Non-U.S. Holders. Our determination is not binding on the IRS, and the IRS may disagree with this determination. If necessary, further information regarding the potential application of Section 871(m) will be provided in the final pricing supplement for the Notes.
We will not be required to pay any additional amounts with respect to U.S. federal withholding taxes.
You should consult your tax adviser regarding the U.S. federal income tax consequences of an investment in the Notes, including possible alternative treatments, as well as tax consequences arising under the laws of any state, local or non-U.S. taxing jurisdiction.
| P-10 | RBC Capital Markets, LLC |
| Barrier Digital Notes Linked to the Class A Common Stock of The Trade Desk, Inc. |
SUPPLEMENTAL PLAN OF DISTRIBUTION (CONFLICTS OF INTEREST)
The Notes are offered initially to investors at a purchase price equal to par, except with respect to certain accounts as indicated on the cover page of this pricing supplement. We or one of our affiliates may pay the underwriting discount as set forth on the cover page of this pricing supplement.
The value of the Notes shown on your account statement may be based on RBCCM’s estimate of the value of the Notes if RBCCM or another of our affiliates were to make a market in the Notes (which it is not obligated to do). That estimate will be based on the price that RBCCM may pay for the Notes in light of then-prevailing market conditions, our creditworthiness and transaction costs. For a period of approximately six months after the Issue Date, the value of the Notes that may be shown on your account statement may be higher than RBCCM’s estimated value of the Notes at that time. This is because the estimated value of the Notes will not include the underwriting discount or our hedging costs and profits; however, the value of the Notes shown on your account statement during that period may initially be a higher amount, reflecting the addition of the underwriting discount and our estimated costs and profits from hedging the Notes. This excess is expected to decrease over time until the end of this period. After this period, if RBCCM repurchases your Notes, it expects to do so at prices that reflect their estimated value.
RBCCM or another of its affiliates or agents may use this pricing supplement in the initial sale of the Notes. In addition, RBCCM or another of our affiliates may use this pricing supplement in a market-making transaction in the Notes after their initial sale. Unless we or our agent informs the purchaser otherwise in the confirmation of sale, this pricing supplement is being used in a market-making transaction.
For additional information about the settlement cycle of the Notes, see “Plan of Distribution” in the accompanying prospectus. For additional information as to the relationship between us and RBCCM, see the section “Plan of Distribution—Conflicts of Interest” in the accompanying prospectus.
STRUCTURING THE NOTES
The Notes are our debt securities. As is the case for all of our debt securities, including our structured notes, the economic terms of the Notes reflect our actual or perceived creditworthiness. In addition, because structured notes result in increased operational, funding and liability management costs to us, we typically borrow the funds under structured notes at a rate that is lower than the rate that we might pay for a conventional fixed or floating rate debt security of comparable maturity. The lower internal funding rate, the underwriting discount and the hedging-related costs relating to the Notes reduce the economic terms of the Notes to you and result in the initial estimated value for the Notes being less than their public offering price. Unlike the initial estimated value, any value of the Notes determined for purposes of a secondary market transaction may be based on a secondary market rate, which may result in a lower value for the Notes than if our initial internal funding rate were used.
In order to satisfy our payment obligations under the Notes, we may choose to enter into certain hedging arrangements (which may include call options, put options or other derivatives) with RBCCM and/or one of our other subsidiaries. The terms of these hedging arrangements take into account a number of factors, including our creditworthiness, interest rate movements, volatility and the tenor of the Notes. The economic terms of the Notes and the initial estimated value depend in part on the terms of these hedging arrangements.
See “Selected Risk Considerations—Risks Relating to the Initial Estimated Value of the Notes and the Secondary Market for the Notes—The Initial Estimated Value of the Notes Will Be Less Than the Public Offering Price” above.
| P-11 | RBC Capital Markets, LLC |
FAQ
What is the maximum return on Royal Bank of Canada's Barrier Digital Notes linked to TTD?
How much principal can I lose on the RY Barrier Digital Notes?
Do the notes pay periodic interest or coupons?
What is the credit risk associated with these notes?
Will the Barrier Digital Notes be listed on an exchange?
Why is the initial estimated value below the $1,000 offering price?
