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The Bank of Nova Scotia has priced $7.07 million in contingent income auto-callable securities maturing on July 25, 2029. These securities offer investors semi-annual coupons of $116.75 per security, contingent on performance criteria. Tied to the iShares MSCI South Korea ETF, these principal-at-risk instruments include automatic early redemption features and a memory coupon structure that accumulates unpaid coupons. This structured product highlights the issuer’s ongoing engagement in domestic capital markets, targeting sophisticated investors prepared to accept significant downside risk.
Key Points
- NYSE: BNS
- $7.07 million aggregate principal amount of contingent income auto-callable securities issued on July 23, 2026
- Contingent semi-annual coupons of $116.75 per security (23.35% annualized) payable if the underlying ETF price stays at or above 60% of its initial price on determination dates
- Maturity date set for July 25, 2029; automatic early redemption triggered if the underlying price reaches the call threshold on non-final determination dates
- Principal is fully at risk if the final underlying share price falls below 50% of the initial price, potentially resulting in total loss
- Investors must monitor determination dates (January 20, 2027; July 20, 2027; January 20, 2028; July 20, 2028; January 22, 2029; July 20, 2029) for coupon eligibility and redemption events
Structured Securities Designed for Experienced Investors
The Bank of Nova Scotia announced a pricing supplement for $7.07 million in contingent income auto-callable securities issued under its Senior Note Program, Series A, dated July 20, 2026. These structured products cater to investors with advanced knowledge of equity-linked instruments and a willingness to accept substantial capital risk. Each security has a stated principal of $1,000, offered at par, with a minimum investment of one security. The original issue date was July 23, 2026, following a three-business-day settlement period from pricing.
This issuance reflects ongoing demand among institutional and high-net-worth investors for alternative fixed income products that offer above-market coupon potential in exchange for principal exposure linked to equity performance. The securities are senior unsecured debt obligations, exposing investors to both issuer credit risk and the performance risk of the underlying asset.
Performance-Dependent Coupon Structure and Payment Terms
The securities provide a contingent semi-annual coupon of $116.75 per security, equivalent to 23.35% per annum on principal, payable only if the iShares MSCI South Korea ETF (Bloomberg: EWY UP) closes at or above 60% of its initial price on each of six scheduled determination dates: January 20, 2027; July 20, 2027; January 20, 2028; July 20, 2028; January 22, 2029; and July 20, 2029. If this threshold is met, the coupon is paid on the corresponding payment date.
A memory coupon feature allows unpaid coupons to accumulate and be paid on future dates if the underlying price subsequently meets the threshold. However, if the ETF never reaches the 60% threshold across all determination dates, investors receive no coupons and no positive returns, even if the principal remains nominally intact above the downside threshold.
Automatic Early Redemption Based on Price Performance
An automatic early redemption provision triggers if the underlying ETF’s closing price reaches or exceeds the call threshold on any determination date except the final one. Although the call threshold is not numerically specified in the disclosure, upon triggering, securities are redeemed on the next coupon payment date. Investors receive principal plus the contingent coupon for that date and any accrued unpaid coupons.
This early redemption caps upside potential, with investors not benefiting from further appreciation beyond the coupons received. Once redeemed early, no additional payments occur regardless of subsequent ETF performance.
Principal Risk and Maturity Payment Conditions
The downside threshold is set at 50% of the initial ETF price. At maturity on July 25, 2029, if the final ETF price is at or above this level, investors receive full principal plus any unpaid coupons. If below 50%, the maturity payment is reduced proportionally to the ETF’s final price relative to its initial price, potentially resulting in a total loss of principal.
The issuer emphasizes that these securities do not guarantee principal repayment at maturity and investors must accept the risk of receiving no coupons during the term. This risk profile differentiates these instruments from traditional bonds, with repayment contingent on South Korean equity market performance and issuer creditworthiness.
Reference Asset and Term Details
The securities are linked to the iShares MSCI South Korea ETF, providing exposure to South Korean equities without direct ownership. The three-year term from July 23, 2026, to July 25, 2029, includes six semi-annual determination and coupon payment dates. These dates may be postponed due to non-trading days or market disruptions as detailed in the product documentation.
Prospective investors should consider factors influencing South Korean equity markets, currency fluctuations between USD and KRW, and macroeconomic conditions, as these affect coupon payments, early redemption, and principal repayment.
Issuer Credit Risk and Senior Unsecured Status
Issued by The Bank of Nova Scotia as senior unsecured debt under its Senior Note Program, Series A, payments on these securities are subject to BNS’s credit risk. A default by BNS could result in total loss of investment regardless of ETF performance.
Without collateral backing, these securities are subordinate to secured obligations, exposing investors to combined issuer credit and equity performance risks. This complex risk profile may not suit investors seeking guaranteed principal or lower risk.
Settlement and Secondary Market Considerations
The original issue date was July 23, 2026, following a T+3 settlement after the July 20 pricing date. Secondary market trades typically settle T+1 under Rule 15c6-1 of the Securities Exchange Act of 1934, requiring investors trading before final delivery to arrange alternative settlement instructions to avoid failed trades.
Liquidity may be limited, with no disclosed secondary market or liquidity provider commitments. Investors should not assume efficient trading or easy exit options prior to maturity or early redemption.
Pricing and Commission Details
The securities were issued at $1,000 per unit, equal to stated principal. While commissions and issue price are referenced, specific commission amounts and allocation between underwriting fees and net proceeds are not detailed in the excerpt. Investors should consult the full prospectus and pricing supplement for comprehensive cost information.
The total issuance amount is $7.07 million, with a minimum purchase of one security. Details on investor distribution or institutional allocations are not disclosed.
Memory Coupon Feature Explained
The memory coupon feature allows deferred payment of missed coupons if the underlying ETF price falls below the 60% threshold on any determination date except maturity. Unpaid coupons accumulate and become payable once the price meets the threshold on a future date, potentially resulting in clustered coupon payments.
Despite this feature, coupon payments remain binary per date—either the threshold is met or not. Investors are warned that if the ETF price is below the threshold on all determination dates, no coupons will be paid, representing the worst-case outcome.
Regulatory Filings and Documentation
The pricing supplement was filed under Rule 424(b)(2) of the Securities Act of 1933 on July 20, 2026, relating to Registration Statement No. 333-282565. Accompanying documents include a prospectus, prospectus supplement, and product supplement dated November 8, 2024, which provide detailed definitions, valuation methods, market disruption provisions, and payment mechanics.
Investors are advised to thoroughly review all referenced materials to understand contingencies such as postponements and adjustments to determination and payment dates. The Bank of Nova Scotia’s full disclosure package serves as the authoritative source for all terms and risk factors associated with these securities.
