[424B2] Royal Bank of Canada Prospectus Supplement
Royal Bank of Canada (RY) has filed a preliminary pricing supplement for a new structured product: Auto-Callable Contingent Coupon Barrier Notes linked to the Class A common stock of Datadog, Inc. (Nasdaq: DDOG). The notes will be issued under RBC’s Senior Global Medium-Term Notes, Series J program and are scheduled to price on 17 July 2025 and settle on 22 July 2025, with a final valuation on 19 July 2027 and maturity on 22 July 2027.
Key economic terms
- Face value: $1,000 minimum denomination.
- Contingent coupon: 3.6125% quarterly (14.45% p.a.) paid only if DDOG’s closing price on the relevant observation date is ≥ 65% of the initial value (the “Coupon Threshold”). Investors may receive zero coupons for any quarter that the threshold is not met.
- Auto-call: Beginning six months after issuance, the notes will be automatically redeemed at par plus the coupon if DDOG’s closing price on any quarterly Call Observation Date is ≥ the initial price.
- Barrier & principal risk: If the notes are not called and DDOG’s final price is ≥ 65% of the initial price, principal is returned at par. If the final price is < 65%, repayment equals par multiplied by the share return—resulting in 1-for-1 downside exposure below the barrier; investors could lose up to 100% of principal.
- Initial estimated value: expected between $912.50-$962.50 per $1,000 (≈ 3.75-8.75% discount to issue price) due to embedded fees and RBC’s lower funding rate.
- Fees: 2.50% underwriting discount; selling concessions up to $25 per $1,000.
- Listing & liquidity: The notes will not be listed. Secondary market, if any, will be made solely by RBC Capital Markets and may involve significant bid-ask spreads.
Risk highlights
- Investors face credit risk of Royal Bank of Canada; the notes are senior unsecured obligations.
- Coupons are contingent; missed coupons typically coincide with periods of heightened principal risk.
- No participation in DDOG upside beyond the fixed coupon; returns are capped at coupon income.
- Early auto-call can limit total return and force reinvestment at potentially lower prevailing yields.
- Secondary market value expected to be below issue price and could be highly volatile.
Illustrative performance shows that, absent auto-call, investors receive the full coupon and par as long as DDOG does not fall more than 35% from the initial price. A 50% decline would deliver only $500, and a ≥ 65% decline wipes out ≥ 65% of principal.
Tax treatment: RBC intends to treat the notes as prepaid financial contracts with associated coupons taxed as ordinary income; however, the IRS could challenge this view. Non-U.S. holders face potential 30% withholding on coupons.
Overall, the product targets income-oriented investors willing to assume issuer credit risk, a 35% downside buffer, and the possibility of no coupons or early redemption. It is not a direct substitute for owning DDOG shares nor a conventional bond.
Royal Bank of Canada (RY) ha presentato un supplemento preliminare di prezzo per un nuovo prodotto strutturato: Note con Cedola Contingente e Barriera Auto-Richiamabili legate all'azione ordinaria Classe A di Datadog, Inc. (Nasdaq: DDOG). Le note saranno emesse nell'ambito del programma Senior Global Medium-Term Notes, Serie J di RBC e sono previste per la quotazione il 17 luglio 2025 con regolamento il 22 luglio 2025, valutazione finale il 19 luglio 2027 e scadenza il 22 luglio 2027.
Termini economici principali
- Valore nominale: taglio minimo di $1.000.
- Cedola contingente: 3,6125% trimestrale (14,45% annuo), pagata solo se il prezzo di chiusura di DDOG alla data di osservazione è ≥ 65% del valore iniziale (la “Soglia Cedola”). Gli investitori potrebbero non ricevere cedole per i trimestri in cui la soglia non è raggiunta.
- Auto-richiamo: A partire da sei mesi dopo l’emissione, le note saranno automaticamente rimborsate a valore nominale più cedola se il prezzo di chiusura di DDOG in una qualsiasi data di osservazione trimestrale di richiamo è ≥ al prezzo iniziale.
- Barriera e rischio capitale: Se le note non vengono richiamate e il prezzo finale di DDOG è ≥ 65% del prezzo iniziale, il capitale viene restituito a valore nominale. Se il prezzo finale è < 65%, il rimborso sarà pari al valore nominale moltiplicato per il rendimento azionario, comportando una esposizione diretta 1-a-1 al ribasso sotto la barriera; gli investitori potrebbero perdere fino al 100% del capitale.
- Valore stimato iniziale: atteso tra $912,50 e $962,50 per $1.000 (circa 3,75-8,75% di sconto sul prezzo di emissione) a causa di commissioni incluse e del minore costo di finanziamento di RBC.
- Commissioni: sconto di sottoscrizione del 2,50%; concessionari di vendita fino a $25 per $1.000.
- Quotazione e liquidità: Le note non saranno quotate. Il mercato secondario, se presente, sarà gestito esclusivamente da RBC Capital Markets e potrebbe presentare spread bid-ask significativi.
Rischi principali
- Gli investitori sono esposti al rischio di credito di Royal Bank of Canada; le note sono obbligazioni senior non garantite.
- Le cedole sono condizionate; la mancata erogazione di cedole coincide spesso con periodi di maggiore rischio sul capitale.
- Non vi è partecipazione all’aumento di prezzo di DDOG oltre la cedola fissa; i rendimenti sono limitati al reddito cedolare.
- L’auto-richiamo anticipato può limitare il rendimento totale e costringere a reinvestire a rendimenti potenzialmente inferiori.
- Il valore di mercato secondario è previsto inferiore al prezzo di emissione e potrebbe essere altamente volatile.
Performance illustrativa mostra che, in assenza di auto-richiamo, gli investitori ricevono la cedola completa e il capitale a patto che DDOG non scenda oltre il 35% dal prezzo iniziale. Un calo del 50% porterebbe a un rimborso di soli $500, mentre un calo ≥ 65% comporterebbe una perdita pari o superiore al 65% del capitale.
Trattamento fiscale: RBC intende considerare le note come contratti finanziari prepagati con cedole tassate come reddito ordinario; tuttavia, l’IRS potrebbe contestare questa interpretazione. I detentori non statunitensi potrebbero essere soggetti a una ritenuta del 30% sulle cedole.
In sintesi, il prodotto è destinato a investitori orientati al reddito disposti ad assumere il rischio di credito dell’emittente, un buffer al ribasso del 35% e la possibilità di non ricevere cedole o di un richiamo anticipato. Non è un sostituto diretto delle azioni DDOG né un’obbligazione convenzionale.
Royal Bank of Canada (RY) ha presentado un suplemento preliminar de precio para un nuevo producto estructurado: Notas con Cupón Contingente y Barrera Auto-Callable vinculadas a las acciones ordinarias Clase A de Datadog, Inc. (Nasdaq: DDOG). Las notas se emitirán bajo el programa Senior Global Medium-Term Notes, Serie J de RBC, con precio previsto para el 17 de julio de 2025, liquidación el 22 de julio de 2025, valoración final el 19 de julio de 2027 y vencimiento el 22 de julio de 2027.
Términos económicos clave
- Valor nominal: denominación mínima de $1,000.
- Cupón contingente: 3.6125% trimestral (14.45% anual), pagado solo si el precio de cierre de DDOG en la fecha de observación correspondiente es ≥ 65% del valor inicial (el “Umbral del Cupón”). Los inversores podrían no recibir cupones en trimestres donde no se cumpla el umbral.
- Auto-llamada: Desde seis meses después de la emisión, las notas se redimirán automáticamente al valor nominal más el cupón si el precio de cierre de DDOG en cualquier fecha trimestral de observación de llamada es ≥ al precio inicial.
- Barrera y riesgo de principal: Si las notas no son llamadas y el precio final de DDOG es ≥ 65% del precio inicial, el principal se devuelve al valor nominal. Si el precio final es < 65%, el reembolso será igual al valor nominal multiplicado por el rendimiento de la acción, lo que implica una exposición directa 1 a 1 a la baja por debajo de la barrera; los inversores podrían perder hasta el 100% del principal.
- Valor estimado inicial: esperado entre $912.50 y $962.50 por $1,000 (≈ 3.75-8.75% de descuento respecto al precio de emisión) debido a las comisiones incorporadas y al menor costo de financiación de RBC.
- Comisiones: descuento de suscripción del 2.50%; concesiones de venta hasta $25 por $1,000.
- Listado y liquidez: Las notas no estarán listadas. El mercado secundario, si existe, será gestionado exclusivamente por RBC Capital Markets y podría presentar spreads significativos entre compra y venta.
Aspectos destacados de riesgo
- Los inversores asumen riesgo crediticio de Royal Bank of Canada; las notas son obligaciones senior no garantizadas.
- Los cupones son contingentes; la ausencia de cupones suele coincidir con periodos de mayor riesgo de principal.
- No hay participación en la subida de DDOG más allá del cupón fijo; los retornos están limitados al ingreso por cupón.
- La auto-llamada anticipada puede limitar el rendimiento total y forzar la reinversión a rendimientos posiblemente más bajos.
- Se espera que el valor en el mercado secundario sea inferior al precio de emisión y pueda ser altamente volátil.
Rendimiento ilustrativo muestra que, sin auto-llamada, los inversores reciben el cupón completo y el principal mientras DDOG no caiga más del 35% desde el precio inicial. Una caída del 50% entregaría solo $500, y una caída ≥ 65% eliminaría ≥ 65% del principal.
Tratamiento fiscal: RBC tiene la intención de tratar las notas como contratos financieros prepagados con cupones gravados como ingreso ordinario; sin embargo, el IRS podría cuestionar esta clasificación. Los titulares no estadounidenses podrían enfrentar una retención del 30% sobre los cupones.
En resumen, el producto está dirigido a inversores orientados a ingresos dispuestos a asumir el riesgo crediticio del emisor, un buffer a la baja del 35% y la posibilidad de no recibir cupones o un reembolso anticipado. No es un sustituto directo de poseer acciones DDOG ni un bono convencional.
로열뱅크오브캐나다(RY)는 새로운 구조화 상품에 대한 예비 가격 보충서를 제출했습니다: Datadog, Inc.(나스닥: DDOG)의 클래스 A 보통주에 연계된 자동 콜 가능 조건부 쿠폰 배리어 노트입니다. 이 노트는 RBC의 시니어 글로벌 중기채권 시리즈 J 프로그램 하에 발행되며, 2025년 7월 17일 가격 책정 예정, 2025년 7월 22일 결제 예정이며, 최종 평가일은 2027년 7월 19일, 만기는 2027년 7월 22일입니다.
주요 경제 조건
- 액면가: 최소 1,000달러 단위.
- 조건부 쿠폰: 분기별 3.6125%(연 14.45%) 지급되며, 해당 관찰일에 DDOG 종가가 초기 가치의 65% 이상일 경우에만 지급됩니다(“쿠폰 임계값”). 임계값 미달 분기에는 쿠폰이 지급되지 않을 수 있습니다.
- 자동 콜: 발행 6개월 후부터, 분기별 콜 관찰일에 DDOG 종가가 초기 가격 이상일 경우 액면가와 쿠폰을 포함해 자동 상환됩니다.
- 배리어 및 원금 위험: 노트가 콜되지 않고 DDOG 최종 가격이 초기 가격의 65% 이상이면 원금은 액면가로 반환됩니다. 최종 가격이 65% 미만이면 원금은 주가 수익률에 따라 액면가에 곱해져 배리어 이하에서는 1대1 하락 노출이 발생하며, 투자자는 원금 전액 손실 가능성이 있습니다.
- 초기 예상 가치: 내재 수수료 및 RBC의 낮은 자금 조달 비용으로 인해 $1,000당 약 $912.50~$962.50(발행가 대비 약 3.75~8.75% 할인)로 예상됩니다.
- 수수료: 2.50% 인수 할인; $1,000당 최대 $25 판매 수수료.
- 상장 및 유동성: 노트는 상장되지 않습니다. 2차 시장이 존재할 경우 RBC 캐피털 마켓이 독점적으로 운영하며, 매수-매도 스프레드가 클 수 있습니다.
위험 요약
- 투자자는 로열뱅크오브캐나다의 신용 위험에 노출되며, 노트는 무담보 시니어 채무입니다.
- 쿠폰은 조건부이며, 쿠폰 미지급 시기는 일반적으로 원금 위험이 높은 시기와 일치합니다.
- DDOG 주가 상승에 대한 참여는 없으며, 수익은 고정 쿠폰으로 제한됩니다.
- 조기 자동 콜은 총 수익을 제한하고, 잠재적으로 낮은 수익률에 재투자를 강요할 수 있습니다.
- 2차 시장 가치는 발행가보다 낮을 것으로 예상되며, 변동성이 클 수 있습니다.
예시 성과에 따르면 자동 콜이 없을 경우, DDOG가 초기 가격 대비 35% 이상 하락하지 않으면 투자자는 전액 쿠폰과 원금을 받습니다. 50% 하락 시 $500만 지급되며, 65% 이상 하락 시 원금의 65% 이상 손실이 발생합니다.
세금 처리: RBC는 노트를 선불 금융 계약으로 간주하고 쿠폰을 일반 소득으로 과세할 계획이나, IRS가 이 견해에 이의를 제기할 수 있습니다. 미국 외 투자자는 쿠폰에 대해 30% 원천징수세가 부과될 수 있습니다.
종합적으로, 이 상품은 발행자 신용 위험, 35% 하락 방어선, 쿠폰 미지급 또는 조기 상환 가능성을 감수할 의향이 있는 소득 지향 투자자를 대상으로 합니다. DDOG 주식 직접 보유나 전통적 채권의 대체품은 아닙니다.
La Royal Bank of Canada (RY) a déposé un supplément préliminaire de prix pour un nouveau produit structuré : des Notes à Coupon Conditionnel avec Barrière et Rappel Automatique, liées aux actions ordinaires de classe A de Datadog, Inc. (Nasdaq : DDOG). Ces notes seront émises dans le cadre du programme Senior Global Medium-Term Notes, Série J de RBC, avec une tarification prévue le 17 juillet 2025, un règlement le 22 juillet 2025, une évaluation finale le 19 juillet 2027 et une échéance le 22 juillet 2027.
Principaux termes économiques
- Valeur nominale : coupure minimale de 1 000 $.
- Coupon conditionnel : 3,6125 % trimestriel (14,45 % annuel), versé uniquement si le cours de clôture de DDOG à la date d'observation concernée est ≥ 65 % de la valeur initiale (le « Seuil du Coupon »). Les investisseurs peuvent ne pas recevoir de coupon pour tout trimestre où le seuil n'est pas atteint.
- Rappel automatique : À partir de six mois après l'émission, les notes seront automatiquement remboursées à leur valeur nominale plus le coupon si le cours de clôture de DDOG à une date d'observation trimestrielle de rappel est ≥ au prix initial.
- Barrière et risque sur le principal : Si les notes ne sont pas rappelées et que le prix final de DDOG est ≥ 65 % du prix initial, le principal est remboursé à la valeur nominale. Si le prix final est < 65 %, le remboursement correspond à la valeur nominale multipliée par la performance de l'action, ce qui entraîne une exposition directe 1 pour 1 à la baisse sous la barrière ; les investisseurs pourraient perdre jusqu'à 100 % du principal.
- Valeur estimée initiale : attendue entre 912,50 $ et 962,50 $ pour 1 000 $ (≈ 3,75-8,75 % de décote par rapport au prix d'émission) en raison des frais incorporés et du coût de financement plus faible de RBC.
- Frais : remise de souscription de 2,50 % ; commissions de vente jusqu'à 25 $ par 1 000 $.
- Cotation et liquidité : Les notes ne seront pas cotées. Le marché secondaire, s'il existe, sera assuré exclusivement par RBC Capital Markets et pourra présenter des écarts importants entre cours acheteur et vendeur.
Points clés sur les risques
- Les investisseurs sont exposés au risque de crédit de la Royal Bank of Canada ; les notes sont des obligations senior non sécurisées.
- Les coupons sont conditionnels ; les coupons manqués coïncident généralement avec des périodes de risque accru sur le principal.
- Aucune participation à la hausse de DDOG au-delà du coupon fixe ; les rendements sont plafonnés aux revenus des coupons.
- Le rappel automatique anticipé peut limiter le rendement total et forcer un réinvestissement à des rendements potentiellement inférieurs.
- La valeur sur le marché secondaire devrait être inférieure au prix d'émission et pourrait être très volatile.
Performance illustrative montre que, en l'absence de rappel automatique, les investisseurs reçoivent le coupon complet et le principal tant que DDOG ne baisse pas de plus de 35 % par rapport au prix initial. Une baisse de 50 % ne restituerait que 500 $, et une baisse ≥ 65 % entraînerait une perte ≥ 65 % du principal.
Traitement fiscal : RBC a l'intention de traiter les notes comme des contrats financiers prépayés avec des coupons imposés comme des revenus ordinaires ; toutefois, l'IRS pourrait contester cette interprétation. Les détenteurs non américains sont susceptibles d'être soumis à une retenue à la source de 30 % sur les coupons.
Globalement, le produit cible les investisseurs orientés vers le revenu, prêts à assumer le risque de crédit de l'émetteur, une marge de baisse de 35 % et la possibilité de ne pas recevoir de coupons ou d'un remboursement anticipé. Ce n'est pas un substitut direct à la détention d'actions DDOG ni une obligation classique.
Die Royal Bank of Canada (RY) hat einen vorläufigen Preiszusatz für ein neues strukturiertes Produkt eingereicht: Auto-Callable Contingent Coupon Barrier Notes, die an die Stammaktien der Klasse A von Datadog, Inc. (Nasdaq: DDOG) gekoppelt sind. Die Notes werden im Rahmen des Senior Global Medium-Term Notes, Series J Programms von RBC ausgegeben und sollen am 17. Juli 2025 bepreist werden, mit Abwicklung am 22. Juli 2025, einer endgültigen Bewertung am 19. Juli 2027 und Fälligkeit am 22. Juli 2027.
Wesentliche wirtschaftliche Bedingungen
- Nennwert: Mindeststückelung von 1.000 USD.
- Bedingter Kupon: 3,6125 % vierteljährlich (14,45 % p.a.), zahlbar nur wenn der Schlusskurs von DDOG am jeweiligen Beobachtungstag ≥ 65 % des Anfangswerts (die „Kupon-Schwelle“) liegt. Anleger erhalten für Quartale, in denen die Schwelle nicht erreicht wird, keine Kupons.
- Auto-Call: Ab sechs Monaten nach Ausgabe werden die Notes automatisch zum Nennwert plus Kupon zurückgezahlt, wenn der Schlusskurs von DDOG an einem der vierteljährlichen Call-Beobachtungstage ≥ dem Anfangspreis ist.
- Barriere & Kapitalrisiko: Werden die Notes nicht zurückgerufen und liegt der Endpreis von DDOG ≥ 65 % des Anfangspreises, wird das Kapital zum Nennwert zurückgezahlt. Liegt der Endpreis < 65 %, entspricht die Rückzahlung dem Nennwert multipliziert mit der Aktienrendite – was eine 1-zu-1 Abwärtsrisiko-Exposition unterhalb der Barriere bedeutet; Anleger könnten bis zu 100 % ihres Kapitals verlieren.
- Geschätzter Anfangswert: Erwartet zwischen 912,50 und 962,50 USD pro 1.000 USD (≈ 3,75-8,75 % Abschlag auf den Ausgabepreis) aufgrund eingebetteter Gebühren und RBCs niedrigerer Finanzierungskosten.
- Gebühren: 2,50 % Underwriting-Discount; Verkaufsprovisionen bis zu 25 USD pro 1.000 USD.
- Notierung & Liquidität: Die Notes werden nicht notiert. Ein Sekundärmarkt, falls vorhanden, wird ausschließlich von RBC Capital Markets betrieben und kann erhebliche Geld-Brief-Spannen aufweisen.
Risikohighlights
- Anleger tragen das Kreditrisiko der Royal Bank of Canada; die Notes sind unbesicherte Senior-Verbindlichkeiten.
- Die Kupons sind bedingt; ausgefallene Kupons fallen typischerweise mit Phasen erhöhten Kapitalrisikos zusammen.
- Keine Partizipation an einem Anstieg von DDOG über den festen Kupon hinaus; Renditen sind auf Kuponzahlungen begrenzt.
- Früher Auto-Call kann die Gesamtrendite begrenzen und eine Reinvestition zu möglicherweise niedrigeren Renditen erzwingen.
- Der Wert am Sekundärmarkt wird voraussichtlich unter dem Ausgabepreis liegen und stark schwanken.
Illustrative Performance zeigt, dass Anleger ohne Auto-Call den vollen Kupon und den Nennwert erhalten, solange DDOG nicht mehr als 35 % gegenüber dem Anfangspreis fällt. Ein Rückgang um 50 % würde nur 500 USD zurückzahlen, und ein Rückgang ≥ 65 % würde ≥ 65 % des Kapitals vernichten.
Steuerliche Behandlung: RBC beabsichtigt, die Notes als vorausbezahlte Finanzverträge zu behandeln, wobei die zugehörigen Kupons als ordentliche Einkünfte besteuert werden; das IRS könnte diese Sichtweise jedoch anfechten. Nicht-US-Investoren könnten einer Quellensteuer von 30 % auf die Kupons unterliegen.
Insgesamt richtet sich das Produkt an einkommensorientierte Anleger, die bereit sind, das Emittenten-Kreditrisiko, eine 35%ige Abwärtspuffer und die Möglichkeit von ausbleibenden Kupons oder vorzeitiger Rückzahlung zu akzeptieren. Es ist kein direkter Ersatz für den Besitz von DDOG-Aktien oder eine herkömmliche Anleihe.
- Attractive headline coupon of 14.45% p.a., significantly above investment-grade bond yields.
- 35% downside buffer (barrier at 65% of initial price) before principal loss at maturity.
- Early auto-call feature can deliver par plus coupon in as little as six months if DDOG performs well.
- Full downside exposure below the 65% barrier can lead to 1-for-1 principal loss, up to 100%.
- No upside participation beyond fixed coupons; investors forgo any DDOG appreciation.
- Credit risk of RBC; payments depend on the issuer’s ability to perform.
- Unlisted security with potentially illiquid and discounted secondary market.
- Initial estimated value up to 8.75% below issue price reflects embedded costs.
- Tax treatment uncertain; coupons may face 30% withholding for non-U.S. holders.
Insights
TL;DR High 14.45% coupon but capped upside, 35% buffer, full downside thereafter; best suited for tactical income-seekers comfortable with RBC credit risk.
The headline 14.45% annual coupon is attractive relative to vanilla corporates, yet investors are effectively short a DDOG put with a 65% strike while receiving limited upside. The auto-call provision favors RBC; if DDOG stays flat or rallies, the notes may be redeemed after just two or three quarters, truncating yield while locking in RBC's funding advantage. The 3.75-8.75% discount between the issue price and estimated fair value highlights embedded fees plus hedging costs. Liquidity risk is material because the notes are unlisted and market-making rests solely with RBCCM. For diversified portfolios, the note can provide equity-linked income, but position sizing is critical given the potential for full principal loss if DDOG collapses. Impact on RBC is immaterial given its scale; impact on buyers depends on equity view and risk tolerance.
TL;DR Investor assumes RBC senior unsecured exposure plus DDOG tail risk; structure offers limited cushion and uncertain liquidity.
The product embeds two key risks: issuer default and DDOG equity risk. RBC carries high investment-grade ratings, but systemic banking stress could still impair recovery rates. From a market-risk standpoint, DDOG is a high-beta software name; a 35% drawdown over two years is plausible, especially if tech valuations compress. Historical volatility (>40%) suggests barrier breaches are not remote. The lack of secondary liquidity and wide bid-ask spreads can trap investors in adverse scenarios. Tax ambiguity, particularly for non-U.S. holders, adds another layer of uncertainty. For these reasons, I classify the note as moderately high risk with a neutral impact rating—reward is attractive yet commensurate with material downside and structural frictions.
Royal Bank of Canada (RY) ha presentato un supplemento preliminare di prezzo per un nuovo prodotto strutturato: Note con Cedola Contingente e Barriera Auto-Richiamabili legate all'azione ordinaria Classe A di Datadog, Inc. (Nasdaq: DDOG). Le note saranno emesse nell'ambito del programma Senior Global Medium-Term Notes, Serie J di RBC e sono previste per la quotazione il 17 luglio 2025 con regolamento il 22 luglio 2025, valutazione finale il 19 luglio 2027 e scadenza il 22 luglio 2027.
Termini economici principali
- Valore nominale: taglio minimo di $1.000.
- Cedola contingente: 3,6125% trimestrale (14,45% annuo), pagata solo se il prezzo di chiusura di DDOG alla data di osservazione è ≥ 65% del valore iniziale (la “Soglia Cedola”). Gli investitori potrebbero non ricevere cedole per i trimestri in cui la soglia non è raggiunta.
- Auto-richiamo: A partire da sei mesi dopo l’emissione, le note saranno automaticamente rimborsate a valore nominale più cedola se il prezzo di chiusura di DDOG in una qualsiasi data di osservazione trimestrale di richiamo è ≥ al prezzo iniziale.
- Barriera e rischio capitale: Se le note non vengono richiamate e il prezzo finale di DDOG è ≥ 65% del prezzo iniziale, il capitale viene restituito a valore nominale. Se il prezzo finale è < 65%, il rimborso sarà pari al valore nominale moltiplicato per il rendimento azionario, comportando una esposizione diretta 1-a-1 al ribasso sotto la barriera; gli investitori potrebbero perdere fino al 100% del capitale.
- Valore stimato iniziale: atteso tra $912,50 e $962,50 per $1.000 (circa 3,75-8,75% di sconto sul prezzo di emissione) a causa di commissioni incluse e del minore costo di finanziamento di RBC.
- Commissioni: sconto di sottoscrizione del 2,50%; concessionari di vendita fino a $25 per $1.000.
- Quotazione e liquidità: Le note non saranno quotate. Il mercato secondario, se presente, sarà gestito esclusivamente da RBC Capital Markets e potrebbe presentare spread bid-ask significativi.
Rischi principali
- Gli investitori sono esposti al rischio di credito di Royal Bank of Canada; le note sono obbligazioni senior non garantite.
- Le cedole sono condizionate; la mancata erogazione di cedole coincide spesso con periodi di maggiore rischio sul capitale.
- Non vi è partecipazione all’aumento di prezzo di DDOG oltre la cedola fissa; i rendimenti sono limitati al reddito cedolare.
- L’auto-richiamo anticipato può limitare il rendimento totale e costringere a reinvestire a rendimenti potenzialmente inferiori.
- Il valore di mercato secondario è previsto inferiore al prezzo di emissione e potrebbe essere altamente volatile.
Performance illustrativa mostra che, in assenza di auto-richiamo, gli investitori ricevono la cedola completa e il capitale a patto che DDOG non scenda oltre il 35% dal prezzo iniziale. Un calo del 50% porterebbe a un rimborso di soli $500, mentre un calo ≥ 65% comporterebbe una perdita pari o superiore al 65% del capitale.
Trattamento fiscale: RBC intende considerare le note come contratti finanziari prepagati con cedole tassate come reddito ordinario; tuttavia, l’IRS potrebbe contestare questa interpretazione. I detentori non statunitensi potrebbero essere soggetti a una ritenuta del 30% sulle cedole.
In sintesi, il prodotto è destinato a investitori orientati al reddito disposti ad assumere il rischio di credito dell’emittente, un buffer al ribasso del 35% e la possibilità di non ricevere cedole o di un richiamo anticipato. Non è un sostituto diretto delle azioni DDOG né un’obbligazione convenzionale.
Royal Bank of Canada (RY) ha presentado un suplemento preliminar de precio para un nuevo producto estructurado: Notas con Cupón Contingente y Barrera Auto-Callable vinculadas a las acciones ordinarias Clase A de Datadog, Inc. (Nasdaq: DDOG). Las notas se emitirán bajo el programa Senior Global Medium-Term Notes, Serie J de RBC, con precio previsto para el 17 de julio de 2025, liquidación el 22 de julio de 2025, valoración final el 19 de julio de 2027 y vencimiento el 22 de julio de 2027.
Términos económicos clave
- Valor nominal: denominación mínima de $1,000.
- Cupón contingente: 3.6125% trimestral (14.45% anual), pagado solo si el precio de cierre de DDOG en la fecha de observación correspondiente es ≥ 65% del valor inicial (el “Umbral del Cupón”). Los inversores podrían no recibir cupones en trimestres donde no se cumpla el umbral.
- Auto-llamada: Desde seis meses después de la emisión, las notas se redimirán automáticamente al valor nominal más el cupón si el precio de cierre de DDOG en cualquier fecha trimestral de observación de llamada es ≥ al precio inicial.
- Barrera y riesgo de principal: Si las notas no son llamadas y el precio final de DDOG es ≥ 65% del precio inicial, el principal se devuelve al valor nominal. Si el precio final es < 65%, el reembolso será igual al valor nominal multiplicado por el rendimiento de la acción, lo que implica una exposición directa 1 a 1 a la baja por debajo de la barrera; los inversores podrían perder hasta el 100% del principal.
- Valor estimado inicial: esperado entre $912.50 y $962.50 por $1,000 (≈ 3.75-8.75% de descuento respecto al precio de emisión) debido a las comisiones incorporadas y al menor costo de financiación de RBC.
- Comisiones: descuento de suscripción del 2.50%; concesiones de venta hasta $25 por $1,000.
- Listado y liquidez: Las notas no estarán listadas. El mercado secundario, si existe, será gestionado exclusivamente por RBC Capital Markets y podría presentar spreads significativos entre compra y venta.
Aspectos destacados de riesgo
- Los inversores asumen riesgo crediticio de Royal Bank of Canada; las notas son obligaciones senior no garantizadas.
- Los cupones son contingentes; la ausencia de cupones suele coincidir con periodos de mayor riesgo de principal.
- No hay participación en la subida de DDOG más allá del cupón fijo; los retornos están limitados al ingreso por cupón.
- La auto-llamada anticipada puede limitar el rendimiento total y forzar la reinversión a rendimientos posiblemente más bajos.
- Se espera que el valor en el mercado secundario sea inferior al precio de emisión y pueda ser altamente volátil.
Rendimiento ilustrativo muestra que, sin auto-llamada, los inversores reciben el cupón completo y el principal mientras DDOG no caiga más del 35% desde el precio inicial. Una caída del 50% entregaría solo $500, y una caída ≥ 65% eliminaría ≥ 65% del principal.
Tratamiento fiscal: RBC tiene la intención de tratar las notas como contratos financieros prepagados con cupones gravados como ingreso ordinario; sin embargo, el IRS podría cuestionar esta clasificación. Los titulares no estadounidenses podrían enfrentar una retención del 30% sobre los cupones.
En resumen, el producto está dirigido a inversores orientados a ingresos dispuestos a asumir el riesgo crediticio del emisor, un buffer a la baja del 35% y la posibilidad de no recibir cupones o un reembolso anticipado. No es un sustituto directo de poseer acciones DDOG ni un bono convencional.
로열뱅크오브캐나다(RY)는 새로운 구조화 상품에 대한 예비 가격 보충서를 제출했습니다: Datadog, Inc.(나스닥: DDOG)의 클래스 A 보통주에 연계된 자동 콜 가능 조건부 쿠폰 배리어 노트입니다. 이 노트는 RBC의 시니어 글로벌 중기채권 시리즈 J 프로그램 하에 발행되며, 2025년 7월 17일 가격 책정 예정, 2025년 7월 22일 결제 예정이며, 최종 평가일은 2027년 7월 19일, 만기는 2027년 7월 22일입니다.
주요 경제 조건
- 액면가: 최소 1,000달러 단위.
- 조건부 쿠폰: 분기별 3.6125%(연 14.45%) 지급되며, 해당 관찰일에 DDOG 종가가 초기 가치의 65% 이상일 경우에만 지급됩니다(“쿠폰 임계값”). 임계값 미달 분기에는 쿠폰이 지급되지 않을 수 있습니다.
- 자동 콜: 발행 6개월 후부터, 분기별 콜 관찰일에 DDOG 종가가 초기 가격 이상일 경우 액면가와 쿠폰을 포함해 자동 상환됩니다.
- 배리어 및 원금 위험: 노트가 콜되지 않고 DDOG 최종 가격이 초기 가격의 65% 이상이면 원금은 액면가로 반환됩니다. 최종 가격이 65% 미만이면 원금은 주가 수익률에 따라 액면가에 곱해져 배리어 이하에서는 1대1 하락 노출이 발생하며, 투자자는 원금 전액 손실 가능성이 있습니다.
- 초기 예상 가치: 내재 수수료 및 RBC의 낮은 자금 조달 비용으로 인해 $1,000당 약 $912.50~$962.50(발행가 대비 약 3.75~8.75% 할인)로 예상됩니다.
- 수수료: 2.50% 인수 할인; $1,000당 최대 $25 판매 수수료.
- 상장 및 유동성: 노트는 상장되지 않습니다. 2차 시장이 존재할 경우 RBC 캐피털 마켓이 독점적으로 운영하며, 매수-매도 스프레드가 클 수 있습니다.
위험 요약
- 투자자는 로열뱅크오브캐나다의 신용 위험에 노출되며, 노트는 무담보 시니어 채무입니다.
- 쿠폰은 조건부이며, 쿠폰 미지급 시기는 일반적으로 원금 위험이 높은 시기와 일치합니다.
- DDOG 주가 상승에 대한 참여는 없으며, 수익은 고정 쿠폰으로 제한됩니다.
- 조기 자동 콜은 총 수익을 제한하고, 잠재적으로 낮은 수익률에 재투자를 강요할 수 있습니다.
- 2차 시장 가치는 발행가보다 낮을 것으로 예상되며, 변동성이 클 수 있습니다.
예시 성과에 따르면 자동 콜이 없을 경우, DDOG가 초기 가격 대비 35% 이상 하락하지 않으면 투자자는 전액 쿠폰과 원금을 받습니다. 50% 하락 시 $500만 지급되며, 65% 이상 하락 시 원금의 65% 이상 손실이 발생합니다.
세금 처리: RBC는 노트를 선불 금융 계약으로 간주하고 쿠폰을 일반 소득으로 과세할 계획이나, IRS가 이 견해에 이의를 제기할 수 있습니다. 미국 외 투자자는 쿠폰에 대해 30% 원천징수세가 부과될 수 있습니다.
종합적으로, 이 상품은 발행자 신용 위험, 35% 하락 방어선, 쿠폰 미지급 또는 조기 상환 가능성을 감수할 의향이 있는 소득 지향 투자자를 대상으로 합니다. DDOG 주식 직접 보유나 전통적 채권의 대체품은 아닙니다.
La Royal Bank of Canada (RY) a déposé un supplément préliminaire de prix pour un nouveau produit structuré : des Notes à Coupon Conditionnel avec Barrière et Rappel Automatique, liées aux actions ordinaires de classe A de Datadog, Inc. (Nasdaq : DDOG). Ces notes seront émises dans le cadre du programme Senior Global Medium-Term Notes, Série J de RBC, avec une tarification prévue le 17 juillet 2025, un règlement le 22 juillet 2025, une évaluation finale le 19 juillet 2027 et une échéance le 22 juillet 2027.
Principaux termes économiques
- Valeur nominale : coupure minimale de 1 000 $.
- Coupon conditionnel : 3,6125 % trimestriel (14,45 % annuel), versé uniquement si le cours de clôture de DDOG à la date d'observation concernée est ≥ 65 % de la valeur initiale (le « Seuil du Coupon »). Les investisseurs peuvent ne pas recevoir de coupon pour tout trimestre où le seuil n'est pas atteint.
- Rappel automatique : À partir de six mois après l'émission, les notes seront automatiquement remboursées à leur valeur nominale plus le coupon si le cours de clôture de DDOG à une date d'observation trimestrielle de rappel est ≥ au prix initial.
- Barrière et risque sur le principal : Si les notes ne sont pas rappelées et que le prix final de DDOG est ≥ 65 % du prix initial, le principal est remboursé à la valeur nominale. Si le prix final est < 65 %, le remboursement correspond à la valeur nominale multipliée par la performance de l'action, ce qui entraîne une exposition directe 1 pour 1 à la baisse sous la barrière ; les investisseurs pourraient perdre jusqu'à 100 % du principal.
- Valeur estimée initiale : attendue entre 912,50 $ et 962,50 $ pour 1 000 $ (≈ 3,75-8,75 % de décote par rapport au prix d'émission) en raison des frais incorporés et du coût de financement plus faible de RBC.
- Frais : remise de souscription de 2,50 % ; commissions de vente jusqu'à 25 $ par 1 000 $.
- Cotation et liquidité : Les notes ne seront pas cotées. Le marché secondaire, s'il existe, sera assuré exclusivement par RBC Capital Markets et pourra présenter des écarts importants entre cours acheteur et vendeur.
Points clés sur les risques
- Les investisseurs sont exposés au risque de crédit de la Royal Bank of Canada ; les notes sont des obligations senior non sécurisées.
- Les coupons sont conditionnels ; les coupons manqués coïncident généralement avec des périodes de risque accru sur le principal.
- Aucune participation à la hausse de DDOG au-delà du coupon fixe ; les rendements sont plafonnés aux revenus des coupons.
- Le rappel automatique anticipé peut limiter le rendement total et forcer un réinvestissement à des rendements potentiellement inférieurs.
- La valeur sur le marché secondaire devrait être inférieure au prix d'émission et pourrait être très volatile.
Performance illustrative montre que, en l'absence de rappel automatique, les investisseurs reçoivent le coupon complet et le principal tant que DDOG ne baisse pas de plus de 35 % par rapport au prix initial. Une baisse de 50 % ne restituerait que 500 $, et une baisse ≥ 65 % entraînerait une perte ≥ 65 % du principal.
Traitement fiscal : RBC a l'intention de traiter les notes comme des contrats financiers prépayés avec des coupons imposés comme des revenus ordinaires ; toutefois, l'IRS pourrait contester cette interprétation. Les détenteurs non américains sont susceptibles d'être soumis à une retenue à la source de 30 % sur les coupons.
Globalement, le produit cible les investisseurs orientés vers le revenu, prêts à assumer le risque de crédit de l'émetteur, une marge de baisse de 35 % et la possibilité de ne pas recevoir de coupons ou d'un remboursement anticipé. Ce n'est pas un substitut direct à la détention d'actions DDOG ni une obligation classique.
Die Royal Bank of Canada (RY) hat einen vorläufigen Preiszusatz für ein neues strukturiertes Produkt eingereicht: Auto-Callable Contingent Coupon Barrier Notes, die an die Stammaktien der Klasse A von Datadog, Inc. (Nasdaq: DDOG) gekoppelt sind. Die Notes werden im Rahmen des Senior Global Medium-Term Notes, Series J Programms von RBC ausgegeben und sollen am 17. Juli 2025 bepreist werden, mit Abwicklung am 22. Juli 2025, einer endgültigen Bewertung am 19. Juli 2027 und Fälligkeit am 22. Juli 2027.
Wesentliche wirtschaftliche Bedingungen
- Nennwert: Mindeststückelung von 1.000 USD.
- Bedingter Kupon: 3,6125 % vierteljährlich (14,45 % p.a.), zahlbar nur wenn der Schlusskurs von DDOG am jeweiligen Beobachtungstag ≥ 65 % des Anfangswerts (die „Kupon-Schwelle“) liegt. Anleger erhalten für Quartale, in denen die Schwelle nicht erreicht wird, keine Kupons.
- Auto-Call: Ab sechs Monaten nach Ausgabe werden die Notes automatisch zum Nennwert plus Kupon zurückgezahlt, wenn der Schlusskurs von DDOG an einem der vierteljährlichen Call-Beobachtungstage ≥ dem Anfangspreis ist.
- Barriere & Kapitalrisiko: Werden die Notes nicht zurückgerufen und liegt der Endpreis von DDOG ≥ 65 % des Anfangspreises, wird das Kapital zum Nennwert zurückgezahlt. Liegt der Endpreis < 65 %, entspricht die Rückzahlung dem Nennwert multipliziert mit der Aktienrendite – was eine 1-zu-1 Abwärtsrisiko-Exposition unterhalb der Barriere bedeutet; Anleger könnten bis zu 100 % ihres Kapitals verlieren.
- Geschätzter Anfangswert: Erwartet zwischen 912,50 und 962,50 USD pro 1.000 USD (≈ 3,75-8,75 % Abschlag auf den Ausgabepreis) aufgrund eingebetteter Gebühren und RBCs niedrigerer Finanzierungskosten.
- Gebühren: 2,50 % Underwriting-Discount; Verkaufsprovisionen bis zu 25 USD pro 1.000 USD.
- Notierung & Liquidität: Die Notes werden nicht notiert. Ein Sekundärmarkt, falls vorhanden, wird ausschließlich von RBC Capital Markets betrieben und kann erhebliche Geld-Brief-Spannen aufweisen.
Risikohighlights
- Anleger tragen das Kreditrisiko der Royal Bank of Canada; die Notes sind unbesicherte Senior-Verbindlichkeiten.
- Die Kupons sind bedingt; ausgefallene Kupons fallen typischerweise mit Phasen erhöhten Kapitalrisikos zusammen.
- Keine Partizipation an einem Anstieg von DDOG über den festen Kupon hinaus; Renditen sind auf Kuponzahlungen begrenzt.
- Früher Auto-Call kann die Gesamtrendite begrenzen und eine Reinvestition zu möglicherweise niedrigeren Renditen erzwingen.
- Der Wert am Sekundärmarkt wird voraussichtlich unter dem Ausgabepreis liegen und stark schwanken.
Illustrative Performance zeigt, dass Anleger ohne Auto-Call den vollen Kupon und den Nennwert erhalten, solange DDOG nicht mehr als 35 % gegenüber dem Anfangspreis fällt. Ein Rückgang um 50 % würde nur 500 USD zurückzahlen, und ein Rückgang ≥ 65 % würde ≥ 65 % des Kapitals vernichten.
Steuerliche Behandlung: RBC beabsichtigt, die Notes als vorausbezahlte Finanzverträge zu behandeln, wobei die zugehörigen Kupons als ordentliche Einkünfte besteuert werden; das IRS könnte diese Sichtweise jedoch anfechten. Nicht-US-Investoren könnten einer Quellensteuer von 30 % auf die Kupons unterliegen.
Insgesamt richtet sich das Produkt an einkommensorientierte Anleger, die bereit sind, das Emittenten-Kreditrisiko, eine 35%ige Abwärtspuffer und die Möglichkeit von ausbleibenden Kupons oder vorzeitiger Rückzahlung zu akzeptieren. Es ist kein direkter Ersatz für den Besitz von DDOG-Aktien oder eine herkömmliche Anleihe.
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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. | |
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Preliminary Pricing Supplement Subject to Completion: Dated July 10, 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 |
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$ Royal Bank of Canada |
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Royal Bank of Canada is offering Auto-Callable Contingent Coupon Barrier Notes (the “Notes”) linked to the performance of the Class A common stock of Datadog, Inc. (the “Underlier”).
| · | Contingent Coupons — If the Notes have not been automatically called, investors will receive a Contingent Coupon on a quarterly Coupon Payment Date at a rate of 14.45% per annum if the closing value of the Underlier is greater than or equal to the Coupon Threshold (65% of the Initial Underlier Value) on the immediately preceding Coupon Observation Date. You may not receive any Contingent Coupons during the term of the Notes. |
| · | Call Feature — If, on any quarterly Call Observation Date beginning approximately six months following the Trade Date, the closing value of the Underlier is greater than or equal to the Initial Underlier Value, the Notes will be automatically called for 100% of their principal amount plus the Contingent Coupon otherwise due. No further payments will be made on the Notes. |
| · | Contingent Return of Principal at Maturity — If the Notes are not automatically called and the Final Underlier Value is greater than or equal to the Barrier Value (65% of the Initial Underlier Value), at maturity, investors will receive the principal amount of their Notes plus the Contingent Coupon otherwise due. If the Notes are not automatically called and 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. |
| · | Any payments on the Notes are subject to our credit risk. |
| · | The Notes will not be listed on any securities exchange. |
CUSIP: 78017PEX5
Investing in the Notes involves a number of risks. See “Selected Risk Considerations” beginning on page P-7 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.
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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 $912.50 and $962.50 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
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| | Auto-Callable Contingent Coupon Barrier Notes Linked to the Class A Common Stock of Datadog, 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 Datadog, Inc. | ||
| | Bloomberg Ticker | Initial Underlier Value(1) | Coupon Threshold and Barrier Value(2) |
| | DDOG UW | $ | $ |
| | (1) The closing value of the Underlier on the Trade Date | ||
| | (2) 65% of the Initial Underlier Value (rounded to two decimal places) | ||
| Trade Date: | July 17, 2025 | ||
| Issue Date: | July 22, 2025 | ||
| Valuation Date:* | July 19, 2027 | ||
| Maturity Date:* | July 22, 2027 | ||
| Payment of Contingent Coupons: |
If the Notes have not been automatically called, investors will receive a Contingent Coupon on a Coupon Payment Date if the closing value of the Underlier is greater than or equal to the Coupon Threshold on the immediately preceding Coupon Observation Date. No Contingent Coupon will be payable on a Coupon Payment Date if the closing value of the Underlier is less than the Coupon Threshold on the immediately preceding Coupon Observation Date. Accordingly, you may not receive a Contingent Coupon on one or more Coupon Payment Dates during the term of the Notes. | ||
| Contingent Coupon: | If payable, $36.125 per $1,000 principal amount of Notes (corresponding to a rate of 3.6125% per quarter or 14.45% per annum) | ||
| Call Feature: | If, on any Call Observation Date, the closing value of the Underlier is greater than or equal to the Initial Underlier Value, the Notes will be automatically called. Under these circumstances, investors will receive on the Call Settlement Date per $1,000 principal amount of Notes an amount equal to $1,000 plus the Contingent Coupon otherwise due. No further payments will be made on the Notes. | ||
| Payment at Maturity: |
If the Notes are not automatically called, investors will receive on the Maturity Date per $1,000 principal amount of Notes, in addition to any Contingent Coupon otherwise due: · If the Final Underlier Value is greater than or equal to the Barrier Value: $1,000 · If the Final Underlier Value is less than the Barrier Value, an amount equal to: $1,000 + ($1,000 × Underlier Return) If the Notes are not automatically called and 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. | ||
| P-2 | RBC Capital Markets, LLC |
| | |
| | Auto-Callable Contingent Coupon Barrier Notes Linked to the Class A Common Stock of Datadog, Inc. |
| 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 |
| Coupon Observation Dates:* | Quarterly, as set forth in the table below |
| Coupon Payment Dates:* | Quarterly, as set forth in the table below |
| Call Observation Dates:* | Quarterly, beginning approximately six months following the Trade Date, on each Coupon Observation Date from and including the second Coupon Observation Date, which is January 20, 2026 |
| Call Settlement Date:* | If the Notes are automatically called on any Call Observation Date, the Coupon Payment Date immediately following that Call Observation Date |
| Calculation Agent: | RBCCM |
| Coupon Observation Dates* | Coupon Payment Dates* |
| October 17, 2025 | October 22, 2025 |
| January 20, 2026 | January 23, 2026 |
| April 17, 2026 | April 22, 2026 |
| July 17, 2026 | July 22, 2026 |
| October 19, 2026 | October 22, 2026 |
| January 19, 2027 | January 22, 2027 |
| April 19, 2027 | April 22, 2027 |
| July 19, 2027 (the Valuation Date) | July 22, 2027 (the Maturity Date) |
* 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-3 | RBC Capital Markets, LLC |
| | |
| | Auto-Callable Contingent Coupon Barrier Notes Linked to the Class A Common Stock of Datadog, 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-4 | RBC Capital Markets, LLC |
| | |
| | Auto-Callable Contingent Coupon Barrier Notes Linked to the Class A Common Stock of Datadog, Inc. |
HYPOTHETICAL RETURNS
The table and examples set forth below illustrate hypothetical payments at maturity for hypothetical performance of the Underlier, based on the Coupon Threshold and Barrier Value of 65% of the Initial Underlier Value and the Contingent Coupon of $36.125 per $1,000 principal amount of Notes. The table and examples below also assume that the Notes are not automatically called and do not account for any Contingent Coupons that may be paid prior to maturity. 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* |
| 50.00% | $1,036.125 | 103.6125% |
| 40.00% | $1,036.125 | 103.6125% |
| 30.00% | $1,036.125 | 103.6125% |
| 20.00% | $1,036.125 | 103.6125% |
| 10.00% | $1,036.125 | 103.6125% |
| 5.00% | $1,036.125 | 103.6125% |
| 0.00% | $1,036.125 | 103.6125% |
| -5.00% | $1,036.125 | 103.6125% |
| -10.00% | $1,036.125 | 103.6125% |
| -20.00% | $1,036.125 | 103.6125% |
| -30.00% | $1,036.125 | 103.6125% |
| -35.00% | $1,036.125 | 103.6125% |
| -35.01% | $649.900 | 64.9900% |
| -40.00% | $600.000 | 60.0000% |
| -50.00% | $500.000 | 50.0000% |
| -60.00% | $400.000 | 40.0000% |
| -70.00% | $300.000 | 30.0000% |
| -80.00% | $200.000 | 20.0000% |
| -90.00% | $100.000 | 10.0000% |
| -100.00% | $0.000 | 0.0000% |
* Including any Contingent Coupon otherwise due
| Example 1 — | The value of the Underlier increases from the Initial Underlier Value to the Final Underlier Value by 30%. | |
| | Underlier Return: | 30% |
| | Payment at Maturity: | $1,000 + Contingent Coupon otherwise due = $1,000 + $36.125 = $1,036.125 |
| |
In this example, the payment at maturity is $1,036.125 per $1,000 principal amount of Notes. Because the Final Underlier Value is greater than the Coupon Threshold and Barrier Value, investors receive a full return of the principal amount of their Notes plus the Contingent Coupon otherwise due. This example illustrates that investors do not participate in any appreciation of the Underlier, which may be significant. | |
| P-5 | RBC Capital Markets, LLC |
| | |
| | Auto-Callable Contingent Coupon Barrier Notes Linked to the Class A Common Stock of Datadog, Inc. |
| Example 2 — | 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 Coupon Threshold and Barrier Value). | |
| | Underlier Return: | -10% |
| | Payment at Maturity: | $1,000 + Contingent Coupon otherwise due = $1,000 + $36.125 = $1,036.125 |
| |
In this example, the payment at maturity is $1,036.125 per $1,000 principal amount of Notes. Because the Final Underlier Value is greater than the Coupon Threshold and Barrier Value, investors receive a full return of the principal amount of their Notes plus the Contingent Coupon otherwise due. | |
| Example 3 — | The value of the Underlier decreases from the Initial Underlier Value to the Final Underlier Value by 50% (i.e., the Final Underlier Value is below the Coupon Threshold and Barrier Value). | |
| | Underlier Return: | -50% |
| | Payment at Maturity: | $1,000 + ($1,000 × -50%) = $1,000 – $500 = $500 |
| |
In this example, the payment at maturity is $500 per $1,000 principal amount of Notes, representing a loss of 50% 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. In addition, because the Final Underlier Value is less than the Coupon Threshold, investors do not receive a Contingent Coupon at maturity. | |
Investors in the Notes could lose a substantial portion or all of the principal amount of their Notes at maturity. The table and examples above assume that the Notes are not automatically called. However, if the Notes are automatically called, investors will not receive any further payments after the Call Settlement Date.
| P-6 | RBC Capital Markets, LLC |
| | |
| | Auto-Callable Contingent Coupon Barrier Notes Linked to the Class A Common Stock of Datadog, 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 Notes are not automatically called and 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. |
| · | You May Not Receive Any Contingent Coupons — We will not necessarily pay any Contingent Coupons on the Notes. If the closing value of the Underlier is less than the Coupon Threshold on a Coupon Observation Date, we will not pay you the Contingent Coupon applicable to that Coupon Observation Date. If the closing value of the Underlier is less than the Coupon Threshold on each of the Coupon Observation Dates, we will not pay you any Contingent Coupons during the term of, and you will not receive a positive return on, your Notes. Generally, this non-payment of the Contingent Coupon coincides with a greater risk of principal loss on your Notes. 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. |
| · | You Will Not Participate in Any Appreciation of the Underlier, and Any Potential Return on the Notes Is Limited — The return on the Notes is limited to the Contingent Coupons, if any, that may be payable on the Notes, regardless of any appreciation of the Underlier, which may be significant. As a result, the return on an investment in the Notes could be less than the return on a direct investment in the Underlier. |
| · | The Notes Are Subject to an Automatic Call — If, on any Call Observation Date, the closing value of the Underlier is greater than or equal to the Initial Underlier Value, the Notes will be automatically called, and you will not receive any further payments on the Notes. Because the Notes could be called as early as approximately six months after the Issue Date, the total return on the Notes could be minimal. You may be unable to reinvest your proceeds from the automatic call in an investment with a return that is as high as the return on the Notes would have been if they had not been called. |
| · | 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. Moreover, non-U.S. investors should note that persons having withholding responsibility in respect of the Notes may withhold on any coupon paid to a non-U.S. investor, generally at a rate of 30%. We will not pay any additional amounts in respect of such withholding. 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. |
| P-7 | RBC Capital Markets, LLC |
| | |
| | Auto-Callable Contingent Coupon Barrier Notes Linked to the Class A Common Stock of Datadog, Inc. |
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 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. |
| P-8 | RBC Capital Markets, LLC |
| | |
| | Auto-Callable Contingent Coupon Barrier Notes Linked to the Class A Common Stock of Datadog, Inc. |
| · | 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. |
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-9 | RBC Capital Markets, LLC |
| | |
| | Auto-Callable Contingent Coupon Barrier Notes Linked to the Class A Common Stock of Datadog, 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, Datadog, Inc. provides an observability and security platform for cloud applications.
The issuer of the Underlier’s SEC file number is 001-39051. The Underlier is listed on The Nasdaq Stock Market under the ticker symbol “DDOG.”
Historical Information
The following graph sets forth historical closing values of the Underlier for the period from September 20, 2019 to July 8, 2025. The red line represents a hypothetical Coupon Threshold and Barrier Value based on the closing value of the Underlier on July 8, 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 Datadog, Inc.
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
| P-10 | RBC Capital Markets, LLC |
| | |
| | Auto-Callable Contingent Coupon Barrier Notes Linked to the Class A Common Stock of Datadog, 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 with associated coupons, and any coupons as ordinary income, as described in the section entitled “United States Federal Income Tax Considerations—Tax Consequences to U.S. Holders—Notes Treated as Prepaid Financial Contracts with Associated Coupons” 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.
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. The U.S. federal income tax treatment of the coupons is unclear. To the extent that we have withholding responsibility in respect of the Notes, we would expect generally to treat the coupons as subject to U.S. withholding tax. Moreover, you should expect that, if the applicable withholding agent determines that withholding tax should apply, it will be at a rate of 30% (or lower treaty rate). In order to claim an exemption from, or a reduction in, the 30% withholding under an applicable treaty, you may need to comply with certification requirements to establish that you are not a U.S. person and are eligible for such an exemption or reduction under an applicable tax treaty. You should consult your tax adviser regarding the tax treatment of the coupons.
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-11 | RBC Capital Markets, LLC |
| | |
| | Auto-Callable Contingent Coupon Barrier Notes Linked to the Class A Common Stock of Datadog, 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-12 | RBC Capital Markets, LLC |
FAQ
What is the coupon rate on the Royal Bank of Canada DDOG-linked notes?
When can the DDOG Auto-Callable Notes be redeemed early?
How much principal protection do investors have?
Will the notes trade on an exchange?
Why is the initial estimated value below the $1,000 issue price?
What tax considerations apply to U.S. investors?
Is there dividend exposure to Datadog stock?
