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The Bank of Nova Scotia has filed a pricing supplement for autocallable contingent coupon notes tied to NVIDIA Corporation's common stock, with maturity set for August 3, 2029. These unsubordinated, unsecured debt securities require a minimum investment of $1,000. Payments depend on NVIDIA's stock performance, and investors risk losing up to 100% of their principal if specific barriers are breached.
Key Points
- NYSE: BNS
- The Bank of Nova Scotia issued autocallable contingent coupon notes linked to NVIDIA stock, maturing August 3, 2029
- Trade date anticipated on July 31, 2026; settlement on August 5, 2026; original issue price at 100.00% with a 1.50% underwriting commission
- Notes include automatic call provisions if NVIDIA stock reaches the initial value, memory coupon functionality, and potential full principal loss if the final value falls below the barrier
Note Structure and Automatic Call Feature
The Bank of Nova Scotia structured these notes with an automatic call mechanism triggered when NVIDIA's stock closing value on any call observation date meets or exceeds the initial pricing value. Upon automatic call, investors receive the principal plus any contingent coupon due on that payment date, including accrued unpaid coupons. No further payments follow an automatic call event.
This feature caps investors' upside exposure at the initial stock value, limiting the Bank's liability while offering a defined return if NVIDIA performs positively. The automatic call may occur anytime during the note's life, potentially shortening the investment horizon from the expected three years.
Contingent Coupon Payments and Memory Feature
The notes offer contingent coupons dependent on NVIDIA's stock closing values on observation dates. If the stock meets or exceeds the contingent coupon barrier, a coupon is paid. The memory feature accumulates unpaid coupons and pays them on the next qualifying date. If the stock falls below the barrier, coupons are deferred but carried forward.
The Bank highlights that interest payments are not guaranteed. Investors may receive no coupons if NVIDIA's stock underperforms relative to the barrier. The memory feature provides some protection by allowing missed payments to accumulate, payable only if future stock performance triggers coupon payments. Investors should assess NVIDIA's stock outlook carefully to gauge income potential.
Maturity Payment and Final Valuation Scenarios
At maturity, if not called, payments depend on NVIDIA's stock final value relative to the barrier. If the final value equals or exceeds the barrier, investors receive principal plus any due coupons, preserving capital. If the final value is below the barrier, investors face losses proportional to NVIDIA stock depreciation, potentially losing up to 100% of principal.
The maturity payment is solely based on NVIDIA's stock return from initial to final value, exposing investors to significant downside risk if stock performance declines substantially.
Credit Risk and Debt Security Details
These notes are unsubordinated, unsecured debt of The Bank of Nova Scotia, exposing investors to the Bank's credit risk. Payments depend on the Bank's creditworthiness, unlike direct NVIDIA stock investments. Financial distress at the Bank could impair payments regardless of NVIDIA stock performance.
The notes lack insurance from the Canada Deposit Insurance Corporation, U.S. Federal Deposit Insurance Corporation, or any other government agency, placing full credit risk on investors. They will not be listed on any U.S. securities exchange or automated quotation system, limiting liquidity.
Investment Terms and Minimum Purchase
The trade date is set for July 31, 2026, with settlement on August 5, 2026. The notes have an approximate three-year term if not called early, maturing August 3, 2029. Minimum investment is $1,000, with additional purchases in $1,000 increments. The original issue price is 100.00% of principal.
CUSIP and ISIN identifiers are 063941DT2 and US063941DT20, respectively, facilitating tracking and transactions. The three-year horizon offers a medium-term investment, though early call may shorten this. The $1,000 minimum makes the notes accessible to retail and institutional investors.
Underwriting Commission and Distribution
Scotia Capital (USA) Inc., affiliated with The Bank of Nova Scotia, will buy the notes at principal and sell to broker-dealers at a 1.50% discount ($15 per note). The Bank may pay up to $4.50 per note as structuring fees to third-party dealers. These arrangements enable distribution to investors.
Proceeds to the Bank are 98.50% of the issue price after underwriting commission. Approximately $985 per $1,000 invested goes to the Bank, with $15 retained by Scotia Capital USA and possible additional dealer fees. Scotia Capital USA may also engage in market-making and secondary market transactions post-issuance.
Estimated Initial Value and Secondary Market Pricing
The Bank estimates the notes' initial value on the trade date to be below the 100.00% issue price, reflecting funding costs, commissions, and structuring expenses. Actual values fluctuate based on multiple factors and cannot be precisely predicted.
Pricing models incorporate the Bank's internal funding rate and market assumptions. The internal funding rate reduces economic terms for investors. The Bank notes that Scotia Capital USA's secondary market prices may temporarily exceed estimated values within approximately three months after issuance.
No Direct NVIDIA Stock Ownership
These notes are derivatives based on NVIDIA's stock price return, not direct equity investments. Investors have no legal or beneficial ownership, voting rights, or entitlement to dividends. Payments are cash-based, linked to NVIDIA's closing stock price, without shareholder privileges.
The filing clarifies these notes do not represent direct NVIDIA stock ownership. Investors cannot participate in corporate actions or receive dividends. Value depends on NVIDIA's stock performance and The Bank of Nova Scotia's creditworthiness. Investors seeking direct exposure with shareholder rights should purchase NVIDIA stock directly.
Risks and Considerations for Investors
Investment involves significant risks detailed in the pricing supplement and accompanying documents. The primary risk is potential loss of up to 100% principal if NVIDIA stock declines below the barrier at maturity.
Other risks include the Bank's credit risk, contingent coupon dependency on stock performance, automatic call risk limiting upside, and limited secondary market liquidity. The notes’ initial estimated value below issue price reflects hedging and funding costs. No interest guarantee exists, and market conditions may affect secondary market value if sold before maturity.
Regulatory Compliance and Filing Information
The filing was made under SEC Rule 424(b)(2) with Registration Number 333-282565, part of a registered shelf registration. The preliminary pricing supplement may change before final delivery. The Bank is not selling or soliciting offers in jurisdictions where prohibited.
The SEC and state regulators have not approved or disapproved the notes or supplements. Any contrary representation is a criminal offense. Scotia Capital USA Inc. serves as underwriter and market-maker. Payments depend on the Bank's creditworthiness, and the notes lack CDIC, FDIC, or other government insurance protections.
