[FWP] Royal Bank of Canada Free Writing Prospectus

Rhea-AI Filing Summary

Royal Bank of Canada (RY) is marketing senior unsecured Barrier Digital Notes maturing 13 July 2028 that are linked to the Class A subordinate voting shares of Shopify Inc. (SHOP). For each $1,000 note, investors receive one of two payouts at maturity:

• Fixed digital return of 43% ($1,430) if Shopify’s closing price on the 10 July 2028 valuation date is at least 50% of the initial price.
• Principal loss equal to the full downside percentage if the closing price is below the 50% barrier (e.g., a 60% share decline delivers $400).

Key structural terms include: no periodic coupons; minimum denomination $1,000; trade date 9 July 2025; issue price 100%; underwriting discount 2.5%; and an initial estimated value of $905-$955, reflecting hedging costs and RBC’s lower internal funding rate. The notes will not be listed, and secondary liquidity will depend solely on RBC Capital Markets. All payments rely on RBC’s creditworthiness; the product is not CDIC/FDIC insured and is exempt from Canadian bail-in rules.

Investment profile: the structure offers a generous 50% protection buffer and a pre-defined 43% upside over roughly three years, but exposes investors to (1) 1-for-1 downside below the barrier, (2) opportunity cost if Shopify outperforms 43%, (3) credit risk, and (4) potential liquidity and pricing frictions in the secondary market. The tax treatment is uncertain; counsel currently views the notes as prepaid open contracts, but the IRS could take a different view.

This security suits investors with a moderately bullish to range-bound view on Shopify who can hold to maturity, accept capped upside, and tolerate issuer and liquidity risk.

Positive

• 50% downside protection before capital is at risk, providing a substantial cushion versus direct equity ownership.
• 43% fixed return delivers equity-like upside if barrier holds, irrespective of modest share performance.
• Issued by RBC, a high-grade bank, which may appeal to credit-sensitive investors.

Negative

• Upside capped at 43%; investors forego any gains beyond this level even if Shopify rallies substantially.
• Full 1-for-1 downside exposure once the 50% barrier is breached, risking total principal loss.
• No interim interest or coupons, creating opportunity cost versus conventional debt.
• Secondary liquidity limited; notes are unlisted and dealer support is discretionary, likely at significant bid-ask spreads.
• Initial estimated value 4.5%-9.5% below issue price highlights high embedded fees and negative carry.

Insights

Structured Products Analyst

TL;DR: 50% buffer plus 43% fixed upside, but capped gains and full downside beyond barrier.

Royal Bank of Canada’s barrier digital notes embed a deep 50% knock-in level, offering an attractive 43% absolute return if Shopify does not halve over three years. The structure converts equity volatility into a binary payout: investors sacrifice all participation above 43% and bear linear downside below the barrier. Given Shopify’s historical volatility (~55% annualised), the probability of breaching a 50% barrier over three years is material, so risk-adjusted value depends heavily on personal market conviction. The initial estimated value (up to 9.5% below the offering price) implies a notable issuer margin. Liquidity will likely be poor, and RBC credit spreads will influence mark-to-market prices. Overall impact: neutral—attractive for specific risk profiles but not broadly market-moving.

 	 
Dual Directional Barrier Digital Notes Linked to the EURO STOXX 50® Index Due July 23, 2030

 

PRODUCT CHARACTERISTICS

· Enhanced Return Potential with a Digital Return — If the Final Underlier Value is greater than or equal to the Initial Underlier Value, at maturity, investors will receive a return equal to the greater of (a) the Underlier Return and (b) the Digital Return of 45%.

· Absolute Value Return — If the Final Underlier Value is less than the Initial Underlier Value, but is greater than or equal to the Barrier Value, at maturity, investors will receive a one-for-one positive return equal to the absolute value of the Underlier Return.

· 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.

KEY TERMS
Issuer:	Royal Bank of Canada (“RBC”)
CUSIP:	78017PDY4
Underlier:	The EURO STOXX 50® Index (Bloomberg symbol “SX5E”)
Trade Date:	July 18, 2025
Issue Date:	July 23, 2025
Valuation Date:	July 18, 2030
Maturity Date:	July 23, 2030
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 Initial Underlier Value, an amount equal to: $1,000 + ($1,000 × the greater of (a) Underlier Return and (b) Digital Return) ·   If the Final Underlier Value is less than the Initial Underlier Value, but is greater than or equal to the Barrier Value, an amount equal to: $1,000 + (-1 × $1,000 × Underlier Return) In this case, you will receive a positive return on the Notes equal to the absolute value of the Underlier Return, even though the Underlier Return is negative. In no event will this return exceed 25%. ·   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.
Digital Return:	45%
Barrier Value:	75% of the Initial Underlier Value
Underlier Return:	Final Underlier Value – Initial Underlier Value Initial Underlier Value
Initial Underlier Value:	The closing value of the Underlier on the Trade Date
Final Underlier Value:	The closing value of the Underlier on the Valuation Date

PAYOFF DIAGRAM

This document provides a summary of the terms of the Notes. Investors should carefully review the accompanying preliminary pricing supplement, product supplement, underlying supplement, prospectus supplement and prospectus, as well as “Selected Risk Considerations” below, before making a decision to invest in the Notes:

https://www.sec.gov/Archives/edgar/data/1000275/000095010325008416/dp231196_424b2-us2760sx5e.htm

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 $896.00 and $946.00 per $1,000 principal amount of Notes and will be less than the public offering price of the Notes. We describe the determination of the initial estimated value in more detail in the accompanying preliminary pricing supplement.

 

 

 

 	 
   

 

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 “Selected Risk Considerations” section of the accompanying preliminary pricing supplement and 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.

· You May Lose a Portion or All of the Principal Amount at Maturity.

· Your Potential for a Positive Return from Depreciation of the Underlier Is Limited.

· 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.

· 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.

· Any Payment on the Notes Will Be Determined Based on the Closing Values of the Underlier on the Dates Specified.

· The U.S. Federal Income Tax Consequences of an Investment in the Notes Are Uncertain.

· There May Not Be an Active Trading Market for the Notes; Sales in the Secondary Market May Result in Significant Losses.

· The Initial Estimated Value of the Notes Will Be Less Than the Public Offering Price.

· The Initial Estimated Value of the Notes Is Only an Estimate, Calculated as of the Trade Date.

· Our and Our Affiliates’ Business and Trading Activities May Create Conflicts of Interest.

· RBCCM’s Role as Calculation Agent May Create Conflicts of Interest.

· You Will Not Have Any Rights to the Securities Included in the Underlier.

· The Notes Are Subject to Risks Relating to Non-U.S. Securities Markets.

· The Notes Do Not Provide Direct Exposure to Fluctuations in Exchange Rates between the U.S. Dollar and the Euro.

· We May Accelerate the Notes If a Change-in-Law Event Occurs.

· Any Payment on the Notes May Be Postponed and Adversely Affected by the Occurrence of a Market Disruption Event.

· Adjustments to the Underlier Could Adversely Affect Any Payments on the Notes.

Royal Bank of Canada has filed a registration statement (including a product supplement, underlying supplement, prospectus supplement and prospectus) with the SEC for the offering to which this document relates. Before you invest, you should read those documents and the other documents that we have filed with the SEC for more complete information about us and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, we, any agent or any dealer participating in this offering will arrange to send you those documents if you so request by calling toll-free at 1-877-688-2301.

As used in this document, “Royal Bank of Canada,” “we,” “our” and “us” mean only Royal Bank of Canada. Capitalized terms used in this document without definition are as defined in the accompanying preliminary pricing supplement.

Registration Statement No. 333-275898; filed pursuant to Rule 433

 

 

FAQ

What is the payout structure of RBC’s Barrier Digital Notes linked to SHOP?

At maturity you receive $1,430 per $1,000 note if Shopify closes at or above 50% of its initial price; otherwise you lose principal in line with the share’s decline.

How much downside protection do the notes provide?

The barrier is set at 50% of the initial Shopify price; losses begin only if the share falls more than 50% from the trade date level.

What is the maximum return I can earn on these notes?

The maximum (and fixed) positive return is 43%, regardless of how much Shopify appreciates above the barrier.

Are the notes tradable before maturity?

They are not exchange-listed; secondary sales depend on RBC Capital Markets making a market and may incur substantial discounts and wide bid-ask spreads.

What credit risk do investors face?

Payments depend on Royal Bank of Canada’s ability to honor its obligations; the notes are senior unsecured and not CDIC/FDIC insured.

Why is the initial estimated value lower than the purchase price?

It reflects RBC’s internal funding rate, hedging costs, and the 2.5% underwriting discount, resulting in an estimated value of $905-$955 per $1,000 note.