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The Bank of Nova Scotia has priced $12.03 million in senior unsecured trigger autocallable notes linked to the EURO STOXX 50 Index, maturing on July 20, 2028. These notes offer an 11.10% annual call return rate and will automatically redeem if the index reaches its initial level on any quarterly observation date after 12 months. Investors should be aware of significant downside risks, including the potential loss of the entire principal if the index falls below 75% of its initial level at maturity.
Key Points
- NYSE: BNS
- Bank of Nova Scotia issued $12.03 million in trigger autocallable notes tied to EURO STOXX 50 Index, maturing July 20, 2028
- Notes priced at $10.00 each with an 11.10% annual call return; initial and call threshold levels set at 6,230.87; downside threshold at 4,673.15 (75% of initial level)
- Automatic call feature activates quarterly after the first 12 months if the index equals or exceeds the initial level; investors must monitor index performance and understand full downside market risk
Structured Note Details and Automatic Call Feature
The Bank of Nova Scotia's trigger autocallable notes are structured debt instruments combining call options with contingent principal repayment. Linked to the EURO STOXX 50 Index, a key European equity benchmark, these notes were priced on July 17, 2026, with settlement expected on July 21, 2026. The initial index level was set at 6,230.87, which also serves as the call threshold. The notes will automatically redeem if the index closes at or above this level on any quarterly observation date starting 12 months post-issuance.
The 11.10% annual call return incentivizes investors by increasing returns the longer the notes remain outstanding without being called. If called on the first eligible date—approximately 12 months after issuance—investors receive principal plus accrued call returns. If the index remains volatile or declines, the notes may stay outstanding through multiple quarterly periods, accumulating higher call returns until redemption.
Downside Risk and Principal Protection
The notes include a downside threshold at 4,673.15, representing 75% of the initial index level. If the notes are not called and the EURO STOXX 50 Index closes at or above this level on the final valuation date (July 17, 2028), investors will receive full principal repayment at maturity, providing a buffer against index declines up to 25%.
However, if the index falls below this threshold and the notes remain outstanding, investors face significant losses. Payments at maturity will be reduced proportionally to the decline in the index from its initial level. In severe cases, investors could lose their entire principal. This contingent principal repayment applies only if the notes are held to maturity and is subject to the creditworthiness of the Bank of Nova Scotia.
Offering Structure and Investment Minimums
The notes were offered with a minimum investment of 100 notes at $10 each, requiring at least $1,000 initially, with additional increments of $10. The total offering size was $12,030,000, allowing both retail and institutional investors to participate. Scotia Capital (USA) Inc., an affiliate of the Bank of Nova Scotia, purchased the entire offering and sold the notes to UBS Financial Services Inc. at a $0.175 per note discount.
After underwriting discounts totaling $210,525, the Bank of Nova Scotia received net proceeds of $11,819,475. This figure excludes any profits from hedging activities related to the notes. Settlement occurred two business days after the trade date, with investors advised to arrange alternative settlement if trading notes before one business day prior to delivery to avoid failed trades.
Valuation and Market Risks
At pricing, the notes’ estimated initial value was $9.758 per $10 principal amount, reflecting a $0.242 discount due to embedded call options and downside exposure. The notes carry dual risks: credit risk from the Bank of Nova Scotia as issuer and market risk from potential EURO STOXX 50 Index declines below the downside threshold.
The notes are substantially riskier than traditional debt, with no guaranteed principal repayment. The issuer benefits from the automatic call feature if the index appreciates, while investors bear full downside exposure. The higher 11.10% call return rate corresponds with increased risk that the notes may not be called and principal loss may occur.
Important Dates and Observation Schedule
The trade date was July 17, 2026, with settlement on July 21, 2026 (T+2). Automatic call observation dates occur quarterly but only after the first 12 months, making the first eligible call date approximately July 2027. The final valuation date is July 17, 2028, with maturity on July 20, 2028, resulting in an approximate two-year investment horizon for holders to maturity.
Observation and valuation dates may be postponed due to market disruption events such as trading halts or exchange closures. The notes are not listed on any securities exchange or electronic communication network, limiting liquidity and secondary market trading options for early exits.
Credit Risk and Default Considerations
All payments under the notes depend on the Bank of Nova Scotia’s creditworthiness. As an unsecured issuer, investors bear full credit risk and may lose their entire investment if the bank defaults, regardless of index performance.
The notes are not insured by the Canada Deposit Insurance Corporation (CDIC), U.S. Federal Deposit Insurance Corporation (FDIC), or any other government insurance. They are also not bail-inable debt under the CDIC Act, meaning they lack special protections during financial crises and are fully dependent on the issuer’s financial stability.
Regulatory Filings and Investor Disclosures
The pricing supplement was filed under Rule 424(b)(2) related to Registration Statement No. 333-282565, with prospectus documents dated November 8, 2024. Neither the SEC nor any other regulator has approved or disapproved these notes or the adequacy of disclosures. Any contrary claims are criminal offenses. Investors are responsible for evaluating the investment’s risks and merits.
Investors must review multiple supplemental documents—including product, underlier, prospectus supplements, and base prospectus—to fully understand terms and risks. Detailed risk factors are outlined in these documents, and investors are advised not to purchase if they do not comprehend or accept the risks involved.
Distribution and Affiliate Relationships
Scotia Capital (USA) Inc., affiliated with the Bank of Nova Scotia, purchased the entire $12.03 million offering and sold the notes to UBS Financial Services Inc., the distribution partner, at the underwriting discount. This affiliate relationship may present conflicts of interest that investors should consider.
The underwriting economics exclude profits from hedging activities by the Bank of Nova Scotia, Scotia Capital, or affiliates, who are expected to engage in dynamic hedging throughout the notes’ life. Such profits provide additional economic benefits beyond disclosed net proceeds.
Index Benchmarks and Thresholds
The EURO STOXX 50 Index (Bloomberg ticker SX5E) underpins the notes. The initial and call threshold level is 6,230.87, with the downside threshold at 4,673.15 (75% of initial). The notes will auto-call if the index returns to or exceeds its initial level at quarterly observations. If the index declines up to 25%, principal is preserved at maturity; declines beyond 25% result in proportional losses, potentially erasing the entire principal.
These notes are identified by CUSIP 06419X687 and ISIN US06419X6875, enabling investors to track them in trading systems.
The structured relationship between initial, call, and downside thresholds defines the risk-return profile: modest index gains trigger automatic redemption with returns, while significant declines expose investors to principal loss.
