AUS
NZ
UK
CA
USA
IND
.jpg)
The Bank of Nova Scotia has announced the issuance of $2,326,000 in Dual Directional Capped Buffered Notes linked to the S&P 500 Index, maturing on July 20, 2028. Detailed in a pricing supplement filed on July 17, 2026, this structured debt offering provides investors with a capped upside potential of 20.81% alongside downside protection for index declines up to 20%. This latest product marks the Bank's continued expansion into market-linked securities, blending equity exposure with principal protection features.
Key Highlights
- NYSE ticker: BNS
- Bank of Nova Scotia issued $2,326,000 in structured notes linked to the S&P 500 Index, maturing July 20, 2028
- Original Issue Price set at 100%, with underwriting commissions of 1.50%; Trade Date: July 17, 2026; Settlement Date: July 22, 2026; term approximately 2 years
- Maximum upside capped at 20.81% if S&P 500 closes at or above initial level; 80% buffer offers downside protection up to a 20% index decline
- Minimum investment amount is $10,000 with increments of $1,000; initial estimated value is $982.29 per $1,000 principal
Terms and Return Structure of the Structured Notes
The Bank of Nova Scotia's Notes feature a dual directional return design aimed at investors seeking both upside exposure and downside risk mitigation in equity markets. According to the filing, if the S&P 500 Index's Final Value meets or surpasses its Initial Value on the Trade Date, investors receive returns equal to the positive performance of the Reference Asset, capped at a maximum gain of 20.81%. This cap limits participation in market gains beyond this threshold.
Regarding downside protection, the Notes employ a buffered structure. If the Final Value of the S&P 500 falls below the Initial Value but remains at or above 80% of that level, investors incur no loss, effectively protecting against declines up to 20%. However, losses escalate beyond this buffer, with investors losing 1.25% of the Principal Amount for each 1% drop beyond the 20% buffer, potentially leading to a full loss of principal if the index declines sufficiently.
Pricing Information and Distribution Details
The Original Issue Price was set at 100% of the Principal Amount, raising $2,326,000 from investors. Underwriting commissions totaled 1.50%, or $34,890, resulting in net proceeds of $2,291,110 for the Bank. Scotia Capital (USA) Inc., an affiliate of the Bank, purchased the Notes at the Original Issue Price and resold them to J.P. Morgan Securities LLC. Both firms serve as joint placement agents for the offering.
The placement agents earned a 1.50% fee per Note but waived fees on sales to fiduciary accounts. The initial estimated value on the Trade Date was $982.29 per $1,000 principal, reflecting approximately a 1.77% discount to the Original Issue Price. This valuation incorporates the Bank's internal funding rate, underwriting discounts, and associated structuring and hedging costs, representing the embedded economic cost of the product.
Investment Parameters and Eligibility
Investors must commit a minimum of $10,000, with additional investments in $1,000 increments. The Notes carry CUSIP number 063941CL0 and ISIN US063941CL03 for secondary market identification. The Trade Date was July 17, 2026, with settlement on July 22, 2026, and maturity approximately two years later on July 20, 2028.
Payments on the Notes are made solely in cash at maturity, with no interest or coupon payments during the term. The Notes are unsubordinated, unsecured debt obligations of the Bank, exposing investors to the Bank’s credit risk. They will not be listed on any U.S. securities exchange or automated quotation system, limiting liquidity to over-the-counter transactions through affiliated market makers.
Issuer Credit Risk and Considerations
The Notes are unsecured and unsubordinated obligations of the Bank of Nova Scotia, with all payments contingent on the Bank’s creditworthiness. Investors bear both the credit risk of the issuer and market risk tied to the S&P 500 Index. Unlike bank deposits, these Notes are not insured by the Canada Deposit Insurance Corporation, the U.S. Federal Deposit Insurance Corporation, or any other government agency, meaning no government guarantee applies.
The Bank’s use of its internal funding rate in pricing results in a lower economic return to investors compared to conventional fixed-rate debt securities. This approach contributes to the difference between the Original Issue Price and the initial estimated value.
Secondary Market Liquidity and Valuation
Scotia Capital (USA) Inc. may engage in market-making activities for the Notes post-issuance. Unless otherwise disclosed in confirmations, the pricing supplement guides these transactions. Secondary market prices will be based on Scotia Capital’s internal pricing models and are not guaranteed.
The Bank may temporarily reimburse a portion of hedging and other costs for about three months following issuance, potentially allowing secondary market prices to exceed the initial estimated value during this period. However, this reimbursement is not guaranteed to be evenly distributed and may be modified or discontinued based on market conditions.
Reference Asset Structure and Investor Rights
The Notes are derivative instruments based solely on the price return of the S&P 500 Index. Investors do not hold direct ownership or economic interests in the index’s constituent stocks and have no voting rights or entitlement to dividends.
As unsubordinated unsecured debt obligations, the Notes provide exposure only to index price movements, without income or governance rights associated with the underlying equities. Investors act as creditors to the Bank, with returns dependent on index performance.
Risk Disclosures and Regulatory Information
The pricing supplement contains extensive risk disclosures, advising investors to review additional risk sections in the pricing supplement, product supplement, and prospectus documents. The Bank stresses the importance of understanding these risks before investing.
The Notes have not been approved or disapproved by the U.S. Securities and Exchange Commission or any state securities commission, and no regulatory body has verified the accuracy of the offering documents. Any contrary representation is a criminal offense.
Estimated Value and Pricing Transparency
The initial estimated value of the Notes was $982.29 per $1,000 principal, below the Original Issue Price of $1,000, reflecting embedded costs such as hedging and the Bank’s internal funding assumptions. The actual value will fluctuate and cannot be precisely predicted.
For some fiduciary accounts, the Original Issue Price may have been as low as $985.00, indicating preferential pricing for certain investor classes. The Bank’s internal pricing models incorporate market assumptions but do not disclose detailed methodologies.
Placement Agents and Distribution Channels
Scotia Capital (USA) Inc., an affiliate of the Bank, serves as the primary distributor, purchasing the Notes at issue and reselling them through J.P. Morgan Securities LLC, which acts as a co-placement agent. This structure facilitates distribution while allowing Scotia Capital to participate in secondary market making.
The filing acknowledges conflicts of interest inherent in this arrangement and directs investors to supplemental disclosures on distribution conflicts. These disclosures highlight that affiliated market makers may prioritize their own interests in pricing and liquidity provision.
