AUS
NZ
UK
CA
USA
IND
_07_03_2026_03_50_21_133108.jpg)
The Bank of Nova Scotia has submitted a preliminary pricing supplement for a senior note program introducing equity-linked securities with auto-callable provisions and contingent coupon payments tied to the lowest-performing stock among Amazon, Broadcom, Alphabet, and NVIDIA. These securities, maturing on August 2, 2029, include complex terms such as the possibility of losing over 40% of principal and are intended to be held until maturity. The offering price is set at $1,000 per security with an agent discount of $23.25.
Key Points
- NYSE: BNS
- Bank of Nova Scotia filed a preliminary pricing supplement for equity-linked securities tied to Amazon, Broadcom, Alphabet Class A, and NVIDIA Corporation common stock
- Securities mature August 2, 2029; initial offering price $1,000 per security with a $23.25 agent discount; net proceeds to the Bank amount to $976.75 per security
- Contingent coupon rate, set at pricing, will be at least 19.45% annually, paid monthly only if the lowest-performing stock closes at or above 60% of its initial price
- Securities are automatically callable if the lowest-performing stock hits 95% of its starting price on monthly calculation days from October 2026 through June 2029
- Investors bear full downside risk to the worst-performing stock if securities are not called before maturity and the final closing price falls below the 60% threshold
Equity-Linked Securities Structured Around Four Leading Tech Stocks
The Bank of Nova Scotia’s new equity-linked securities are designed to reflect the performance of four prominent technology companies: Amazon.com Inc., Broadcom Inc., Alphabet Inc. Class A, and NVIDIA Corporation. The securities’ returns depend solely on the lowest-performing stock among these four on each relevant calculation day, regardless of the other stocks’ performance.
According to the filing, the lowest-performing underlying stock on any calculation day is identified as the one with the lowest closing price expressed as a percentage of its starting price. This means investors do not benefit from gains in better-performing stocks and are exposed to losses if any single stock declines significantly. These securities are unsecured senior debt obligations of the Bank of Nova Scotia, subject to the Bank’s credit risk, and are not insured by the Canada Deposit Insurance Corporation, the U.S. Federal Deposit Insurance Corporation, or any other government agency.
Contingent Coupon Payments and Memory Feature Explained
The securities offer contingent coupon payments monthly until maturity or an automatic call event. The coupon rate, determined at pricing, will be no less than 19.45% per annum. However, coupons are paid only if the lowest-performing stock’s closing price on the calculation day is at or above 60% of its starting price.
A memory feature applies to missed coupons: if the lowest-performing stock falls below the 60% threshold on one or more calculation days but later recovers to or above that level, investors receive the current month’s coupon plus all previously unpaid coupons without interest. If the stock remains below the threshold throughout the term, no coupon payments are made, and missed payments are forfeited if the stock never recovers.
Automatic Call Feature and Early Redemption Terms
The securities include an automatic call provision that triggers if the lowest-performing stock’s closing price reaches or exceeds 95% of its starting price on any monthly calculation day from October 2026 to June 2029. Upon automatic call, the Bank redeems the securities at face value plus a final coupon payment and any unpaid coupons. Unlike traditional bonds, these securities may be redeemed early rather than at maturity.
The automatic call threshold (95%) is significantly higher than the coupon threshold (60%), creating a scenario where investors might receive monthly coupons for an extended period before the securities are unexpectedly called if the underlying stock appreciates. The filing notes these securities are intended to be held to maturity and will not be listed on any exchange.
Principal Loss Risks and Downside Exposure
Investors face considerable downside risk if the securities are not called before maturity. If the lowest-performing stock’s closing price on the final calculation day is below 60% of its starting price, investors may lose over 40% of their principal, potentially the entire face amount. This contrasts with traditional senior debt, which typically repays full principal at maturity.
The filing highlights that investors bear full downside exposure to the worst-performing stock’s decline but do not benefit from any appreciation or dividends from the underlying stocks. This asymmetric risk profile means substantial losses are possible without upside participation beyond the call threshold.
Bank of Nova Scotia’s Valuation and Pricing Details
The Bank estimates the securities’ value between $904.87 and $934.87 per security (90.487% to 93.487% of face value) based on the filing date. This valuation excludes hedging profits and reflects the Bank’s internal pricing methodology. The approximately $30 spread represents about 3% of face value.
The filing warns that dealer spreads and projected hedging profits included in the offering price may negatively impact secondary market prices. Since the securities are designed for maturity holding and lack exchange listing, secondary market liquidity could be limited. The Bank’s estimated values are internal assessments and may differ from actual secondary market prices.
Offering Price, Distribution, and Agent Compensation
The securities are offered at $1,000 each with a $23.25 agent discount, resulting in net proceeds of $976.75 per security to the Bank. Scotia Capital (USA) Inc., an affiliate, will purchase the securities for distribution to registered broker-dealers such as Wells Fargo Securities, LLC, or offer them directly to investors. Wells Fargo Securities will provide selected dealers with selling concessions up to $17.50 per security, and Wells Fargo Advisors may receive distribution fees of $0.75 per security.
The Bank may also pay up to $3.00 per security to select dealers for marketing and related services. Scotia Capital or its affiliates may engage in market-making transactions using the pricing supplement after initial sales, creating potential conflicts of interest in secondary market trading.
Concentration Risk and Impact of Multi-Stock Linkage
The filing underscores that investors’ returns depend entirely on the lowest-performing stock among the four. Gains from better-performing stocks do not improve returns, while poor performance by any single stock adversely affects outcomes. This structure introduces significant concentration risk, as performance is based on the worst performer rather than an average or best-performing stock.
For instance, if Amazon, Broadcom, and Alphabet rise but NVIDIA falls 45%, the coupon payment would be missed because NVIDIA falls below the 60% coupon threshold. Conversely, if NVIDIA reaches 98% but others fall to 50%, automatic call would not trigger since the lowest-performing stock is below the 95% call threshold. Essentially, investors are short the worst-performing stock without upside from better performers.
Credit Risk and Regulatory Disclosures
All payments depend on the creditworthiness of The Bank of Nova Scotia. These senior unsecured debt securities are not collateralized and rank equally with other senior unsecured debt. They are not insured by the Canada Deposit Insurance Corporation, U.S. Federal Deposit Insurance Corporation, or any other governmental agency.
The filing includes standard regulatory disclaimers that neither the SEC nor any state securities commission has approved or disapproved the securities or reviewed the pricing supplement’s accuracy. It warns that representations to the contrary are criminal offenses. Investors should recognize these securities carry risks beyond those of conventional debt instruments and consult the product supplement, prospectus supplement, and prospectus for detailed risk disclosures.
Calculation Schedule and Payment Timing
The securities feature monthly calculation days, with the automatic call active from October 2026 through June 2029. The final calculation day coincides with the August 2, 2029 maturity date. Monthly contingent coupons are paid if the lowest-performing stock’s closing price meets or exceeds 60% of its starting price on the relevant calculation day. The multiple observation dates mean outcomes depend on closing prices across twelve monthly periods between pricing and maturity.
The starting price for each stock is set on the pricing date, and all thresholds are percentages of these initial prices. Investors cannot predict coupon payments or automatic call events in advance, as these depend entirely on future stock price movements. The monthly schedule provides numerous opportunities for the automatic call to be triggered if the lowest-performing stock appreciates sufficiently.
Preliminary Pricing Status and Regulatory Filing Context
This preliminary pricing supplement, dated July 22, 2026, is filed under Rule 424(b)(2) of the Securities Act of 1933. It relates to Registration Statement No. 333-282565 and references Product Supplement No. WF-1, Prospectus Supplement, and Prospectus all dated November 8, 2024. The filing notes the information is incomplete and subject to change, and that it does not constitute an offer to sell or solicitation to buy in jurisdictions where such offers are prohibited.
Final terms, including the actual contingent coupon rate above the 19.45% minimum, starting prices for each underlying stock, and other specifics, remain to be finalized. The final pricing supplement will supersede this preliminary version. Prospective investors should review the final documents carefully before investing.
