AUS
NZ
UK
CA
USA
IND
The Bank of Nova Scotia announced the issuance of capped notes tied to the SPDR Gold Trust, with an anticipated trade date of July 24, 2026, and maturity on August 11, 2027. These notes provide investors returns based on the positive performance of the gold trust shares, capped at a minimum maximum return of 12.72%, while limiting potential losses to 5% of principal. It is important for investors to recognize that these notes are unsubordinated, unsecured debt instruments subject to the credit risk of the bank.
Key Highlights
- Stock Symbol: NYSE: BNS
- Bank of Nova Scotia issued capped notes linked to SPDR Gold Trust shares, maturing August 11, 2027
- Notes offer a capped return of at least 12.72% and limit downside losses to 5% of principal; approximately 54-week term; minimum investment of $10,000
- Original issue price at 100%; Scotia Capital and J.P. Morgan Securities serve as placement agents; initial note value estimated between $958.48 and $988.48 per $1,000 principal
Gold-Linked Notes: Structure and Payment Details
The Bank of Nova Scotia detailed that these notes are unsubordinated, unsecured debt securities with returns linked to the SPDR Gold Trust share performance. Investors will receive returns equal to any positive gain in the reference asset, subject to a capped maximum return of at least 12.72%. The notes do not pay interest or coupons before maturity, with all payments made in cash on August 11, 2027. The term is approximately 54 weeks, with the trade date expected on July 24, 2026, and settlement on July 29, 2026.
Regarding downside risk, if the final value of the reference asset falls below its initial value, investors will incur a loss of 1% of principal for each 1% decline in value, capped at a maximum loss of 5% of principal. The minimum investment is $10,000, with additional investments in multiples of $1,000. The notes carry CUSIP 063941DW5 and ISIN US063941DW58.
Pricing, Distribution, and Initial Valuation Insights
The original issue price is set at 100% of principal, with underwriting commissions of 1% per note. Scotia Capital (USA) Inc., affiliated with the bank, will purchase the notes at this price and resell them to J.P. Morgan Securities LLC. Both entities act as placement agents and receive a 1% fee per note, waived for fiduciary account sales. Net proceeds to the bank after commissions are 99% of principal.
The initial estimated value of the notes at pricing is projected between $958.48 and $988.48 per $1,000 principal, below the original issue price. This difference reflects factors such as internal funding rates, underwriting discounts, and structuring costs. The bank’s internal pricing models, accounting for market assumptions and funding costs, determine this valuation range.
Credit Risk and Important Investment Considerations
Payments on these notes depend on the Bank of Nova Scotia's creditworthiness. The notes are unsubordinated, unsecured obligations and derivative products based on the SPDR Gold Trust’s price return. Investors will not have direct economic interests, claims, or ownership rights—including voting or distribution rights—in the reference asset or its components.
The notes will not be listed on any U.S. securities exchange or automated quotation system, potentially impacting liquidity. Investors should review risk disclosures beginning on pages P-9 and PS-6 of the pricing supplement and product supplement. Neither the SEC nor any state securities commission has approved or disapproved the notes or the accuracy of related documents.
Market-Making and Secondary Market Dynamics
The filing highlights potential conflicts of interest in market-making activities. J.P. Morgan Securities and affiliates act as placement agents, while Scotia Capital (USA) Inc. may conduct market-making transactions post-sale. Unless otherwise stated in sale confirmations, the pricing supplement is used in market-making.
The bank disclosed that Scotia Capital’s initial secondary market prices may temporarily exceed the estimated trade date value for about three months post-issue. This reflects potential reimbursement of hedging and structuring costs no longer expected during the term. Reimbursement timing and amounts may vary or be discontinued based on market conditions.
Regulatory Status and Deposit Insurance Exclusion
The notes are not insured by the Canada Deposit Insurance Corporation (CDIC), U.S. Federal Deposit Insurance Corporation (FDIC), or any government agency in Canada, the U.S., or elsewhere. This distinction is critical for investors used to traditional bank deposit protections.
Filed under Rule 424(b)(2) of the Securities Act with registration number 333-282565, the preliminary pricing supplement dated July 21, 2026, is subject to change. The bank will not sell the notes until the final pricing supplement is delivered and will not solicit sales in states where prohibited.
Internal Funding Rate and Economic Terms Explained
The economic terms rely on the bank’s internal funding rate, the cost to borrow via similar market-linked notes issuance. This rate, combined with underwriting discounts and structuring costs—including hedging—shapes the notes’ economic profile. The internal funding rate is typically lower than rates for conventional fixed-rate debt, resulting in reduced economic terms for investors.
This approach explains why the original issue price exceeds the initial estimated value, as detailed in the pricing supplement. The estimated value range reflects the bank’s internal pricing models and incorporated economic factors.
SPDR Gold Trust as Reference Asset
The SPDR Gold Trust serves as the reference asset, a publicly traded fund primarily holding gold. However, investors in these notes do not have direct ownership or economic interest in the trust’s gold or its constituents. The notes are derivative instruments whose value derives from the SPDR Gold Trust’s price performance, not direct investment in the underlying assets.
This distinction clarifies that the notes do not represent a direct investment in the trust’s holdings. Investors gain exposure to gold price movements indirectly through the notes’ structure, not via ownership or claims on physical gold or the trust.
Investor Suitability and Risk Disclosures
Investment in these notes involves risks requiring thorough evaluation. Investors should review additional risk factors starting on page P-9 of the pricing supplement, with further details in the product supplement (page PS-6) and prospectus supplement (page S-2), plus page 8 of the prospectus.
Risks include issuer credit risk, market risk linked to the reference asset, liquidity risk due to lack of exchange listing, and estimated value risk. The significant difference between estimated initial value and issue price signals the need for careful assessment. The preliminary pricing supplement’s potential changes add further uncertainty.
Fee Structure and Distribution Details
Scotia Capital purchases the notes at 100% issue price and sells them to J.P. Morgan Securities, both acting as placement agents. They receive a 1% fee per note on sales to non-fiduciary accounts, with fees waived for fiduciary accounts. Net proceeds to the bank are 99% of principal, which must be considered alongside hedging and structuring costs.
This transparent fee disclosure highlights distribution costs embedded in pricing, reducing economic value available for returns. The possibility of hedging cost reimbursements over a temporary three-month period adds complexity for investors to consider.
