AUS
NZ
UK
CA
USA
IND
The Bank of Nova Scotia has introduced Callable Contingent Coupon Notes maturing on July 29, 2031, with returns tied to the Nasdaq-100 Index, Russell 2000 Index, and S&P 500 Index performances. These notes, classified as unsubordinated and unsecured debt, offer contingent coupon payments but carry the risk of full principal loss if the lowest-performing reference asset falls below its barrier value at maturity. This structured product enables the Canadian bank to tap into U.S. capital markets via Scotia Capital (USA) Inc.
Key Points
- NYSE: BNS
- Bank of Nova Scotia issued five-year callable structured notes with contingent coupons linked to three major equity indices
- Notes priced at 100% of principal, expected pricing on July 24, 2026, settlement on July 29, 2026; minimum investment of $1,000
- Investors must monitor market conditions impacting the three reference indices; principal is at risk if the lowest-performing index breaches its barrier value
Note Structure and Underlying Indices
The Bank of Nova Scotia's Callable Contingent Coupon Notes derive their payment terms from the Nasdaq-100, Russell 2000, and S&P 500 indices. Payments depend on these reference assets' performance, with the least-performing index determining final maturity payments. This multi-asset structure exposes investors to downside risk tied to the worst-performing index, differentiating these notes from single-index linked products.
The notes do not grant investors direct ownership or economic rights in the underlying stocks of the indices. There are no voting rights, dividends, or other stockholder privileges. Instead, investors hold contractual claims on the Bank of Nova Scotia based solely on index price performance, a critical consideration for assessing risk and return.
Contingent Coupon Payments and Call Features
Coupon payments are conditional, awarded only if each reference asset’s closing value on observation dates meets or exceeds specified barrier levels. The notes do not guarantee coupon payments, introducing uncertainty regarding periodic income.
The Bank reserves the right to call the notes in full on any call settlement date at its discretion, regardless of index performance. If called, investors receive principal plus any contingent coupon due. This call option may limit upside gains if markets rally significantly, as the Bank may redeem notes when beneficial to itself rather than investors.
Principal Risk and Maturity Payoff
At maturity, if not called, payment depends on the least-performing reference asset’s final performance. If this asset’s final value is at or above its barrier, investors receive full principal plus any final coupon. However, if it falls below the barrier, investors incur losses proportional to that asset’s depreciation, potentially losing up to 100% of principal. This structure concentrates downside risk on the worst-performing index.
Estimated Initial Value and Secondary Market Dynamics
At pricing, the notes’ estimated value ranges between $947.66 and $977.66 per $1,000 principal, below the 100% issue price. This difference reflects the Bank’s funding costs, underwriting, structuring, and hedging expenses. The original issue price includes the Bank’s internal funding rate, typically lower than conventional fixed-rate debt issuance costs.
Secondary market prices may initially exceed the Bank’s estimated value for about three months post-issuance, reflecting discretionary reimbursement of hedging and structuring costs. Afterward, prices will likely mirror embedded costs and underlying asset performance.
Distribution and Sales Arrangements
Scotia Capital (USA) Inc., an affiliate of the Bank, will purchase the notes at principal amount and resell them to registered broker-dealers at the same price. The Bank may pay third-party dealers up to $4.50 per note as structuring fees. Scotia Capital (USA) Inc. may also act as market maker post-issuance, creating potential conflicts of interest investors should consider.
Credit Risk and Debt Security Details
These unsubordinated, unsecured debt securities expose investors to the Bank of Nova Scotia’s credit risk. Payments depend entirely on the Bank’s creditworthiness, with no collateral backing. The notes are not insured by the Canada Deposit Insurance Corporation, U.S. FDIC, or any government agency, emphasizing the absence of deposit insurance protection.
Offering Terms and Investment Details
The notes require a minimum investment of $1,000 and multiples thereof. Pricing is expected on July 24, 2026, with settlement on July 29, 2026, and a term of approximately five years if not called. The CUSIP is 063941DQ8 and ISIN US063941DQ80. All payments will be made in cash. The notes will not be listed on U.S. exchanges or quotation systems, implying limited liquidity and reliance on over-the-counter sales or Scotia Capital (USA) Inc. market-making.
Regulatory Filings and Disclosure
The pricing supplement was filed under SEC Rule 424(b)(3) with Registration No. 333-282565, including a "Subject to Completion" notice. The preliminary supplement dated July 20, 2026, was amended on July 21, 2026. Neither the SEC nor state regulators have approved or disapproved the notes or verified the accuracy of offering documents. Misrepresentations regarding regulatory approval would be criminal offenses. Investors should review all prospectus and supplement materials for comprehensive risk and terms understanding.
Risk Considerations for Investors
These notes involve multiple risks: concentrated exposure to the least-performing index, issuer credit risk, limited liquidity, initial pricing below issue price, and uncertain coupon payments. Detailed risk disclosures appear across various offering documents. The notes’ value is influenced by many factors and cannot be precisely predicted. Investors must fully understand the least-performing asset calculation and barrier levels before investing.
