Filed Pursuant to Rule 433
Registration Statement No. 333-259205
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The information in this preliminary terms supplement is not complete and may be changed.
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Preliminary Terms Supplement
Subject to Completion:
Dated July 5, 2022
Pricing Supplement Dated July __, 2022 to the Product Prospectus Supplement Dated September 14, 2021, the Prospectus Supplement Dated September 14, 2021 and the
Prospectus Dated September 14, 2021
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$
Fixed Coupon Barrier Notes Linked to the
Common Stock of Tesla, Inc., Due July 20,
2023
Royal Bank of Canada
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Issuer:
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Royal Bank of Canada
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Stock Exchange Listing:
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None
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Trade Date:
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July 15, 2022
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Principal Amount:
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$1,000 per Note
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Issue Date:
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July 20, 2022
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Maturity Date:
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July 20, 2023
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Coupon Payment:
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Each coupon will be paid in equal monthly payments.
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Final Stock Price:
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The closing price of the Reference Stock on the Valuation Date.
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Payment at Maturity (if
held to maturity):
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For each $1,000 in principal amount of the Notes, the investor will receive at maturity $1,000 plus any accrued and unpaid interest, unless the Final Stock Price is less than the Barrier
Price.
If the Final Stock Price is less than the Barrier Price, then the investor will receive at maturity, for each $1,000 in principal amount, a cash payment equal to: $1,000 + ($1,000 x
Reference Stock Return)
Investors could lose some or all of their principal amount if the Final Price is less than the Barrier Price.
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Monitoring Period:
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The Valuation Date.
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Reference Stock
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Annual
Coupon Rate
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Initial
Stock
Price
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Barrier Price
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CUSIP
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Principal
Amount
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Price to
Public(1)
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Underwriting Discounts
and Commissions(1)
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Proceeds to
Royal Bank of
Canada
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Tesla, Inc. (TSLA)
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[12.50% - 13.50%] (to be determined on the Trade Date)
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$
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50% of the
Initial Stock
Price
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78016FNQ3
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$
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$100%
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$
2.25%
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$
97.75%
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Fixed Coupon Barrier Notes
Royal Bank of Canada
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General:
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This terms supplement relates to an offering of Fixed Coupon Barrier Notes (the “Notes”) linked to the common stock (the “Reference Stock”) of Tesla, Inc. (the
“Reference Stock Issuer”).
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Issuer:
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Royal Bank of Canada (“Royal Bank”)
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Trade Date (Pricing
Date):
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July 15, 2022
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Issue Date:
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July 20, 2022
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Valuation Date:
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July 17, 2023
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Maturity Date:
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July 20, 2023
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Denominations:
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Minimum denomination of $1,000, and integral multiples of $1,000 thereafter.
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Designated Currency:
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U.S. Dollars
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Coupon Rate:
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[12.50% - 13.50%] per annum (to be determined on the Trade Date). Each coupon will be paid in equal monthly payments on the applicable Coupon Payment Date.
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Coupon Payment
Dates:
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August 18, 2022, September 20, 2022, October 20, 2022, November 18, 2022, December 20, 2022, January 20, 2023, February 21, 2023, March 20, 2023, April 20, 2023,
May 18, 2023, June 21, 2023 and the Maturity Date.
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Record Dates:
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The record date for each Coupon Payment Date will be one business day prior to that scheduled Coupon Payment Date; provided, however, that the Coupon Payment at
maturity will be payable to the person to whom the payment at maturity is payable.
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Initial Stock Price:
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The closing price of the Reference Stock on the Trade Date.
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Barrier Price:
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50% of the Initial Stock Price.
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Final Stock Price:
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The closing price of the Reference Stock on the Valuation Date.
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Payment at Maturity (if
held to maturity):
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For each $1,000 in principal amount of the Notes, the investor will receive $1,000 plus any accrued and unpaid interest at maturity, unless the Final Stock Price is less than the Barrier
Price.
If the Final Stock Price is below the Barrier Price, you will receive at maturity, for each $1,000 in principal amount, a cash payment equal to: $1,000 + ($1,000 x Reference Stock
Return).
The amount of cash that you receive will be less than your principal amount, if anything, resulting in a loss that is proportionate to the decline of the Reference Stock from the Trade
Date to the Valuation Date.
Investors in the Notes will lose some or all of their principal amount if the Final Price is less than the Barrier Price.
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Reference Stock
Return:
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Final Stock Price – Initial Stock Price
Initial Stock Price
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Fixed Coupon Barrier Notes
Royal Bank of Canada
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Physical Delivery
Amount: |
Not applicable. Payments on the Notes will be made solely in cash.
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Monitoring Period:
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The Valuation Date. The price of the Reference Stock between the Trade Date and the Valuation Date will not impact the Payment at Maturity.
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Monitoring Method:
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Close of Trading Day
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Early Redemption:
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The Notes are not subject to redemption prior to maturity, whether at our option, or based on the closing price of the
Reference Stock at any time.
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Calculation Agent:
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RBC Capital Markets, LLC (“RBCCM”)
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U.S. Tax Treatment:
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By purchasing a Note, each holder agrees (in the absence of a change in law, an administrative determination or a judicial ruling to the contrary) to treat the Notes as an investment
unit consisting of (i) a non-contingent debt instrument subject to the rules governing short-term debt instruments (as described under “Tax Consequences—United States Taxation—Original Issue Discount—Short-Term Debt Securities” in the
accompanying prospectus) issued by us to you and (ii) a put option with respect to the Reference Stock written by you and purchased by us. However, the U.S. federal income tax consequences of your investment in the Notes are uncertain
and the Internal Revenue Service could assert that the Notes should be taxed in a manner that is different from that described in the preceding sentence. Please see the section below, “Supplemental Discussion of U.S. Federal Income
Tax Consequences,” and the discussion (including the opinion of our special U.S. tax counsel, Ashurst LLP) in the product prospectus supplement dated September 14, 2021 under “Supplemental Discussion of U.S. Federal Income Tax
Consequences,” which apply to the Notes.
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Secondary Market:
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RBCCM (or one of its affiliates), though not obligated to do so, may maintain a secondary market in the Notes after the issue date. The amount that you may
receive upon sale of your Notes prior to maturity may be less than the principal amount.
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Listing:
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The Notes will not be listed on any securities exchange.
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Settlement:
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DTC global (including through its indirect participants Euroclear and Clearstream, Luxembourg as described under “Ownership and Book-Entry Issuance” in the
prospectus dated September 14, 2021).
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Terms Incorporated in
the Master Note:
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The terms appearing on pages P-2 and P-3 of this terms supplement above the caption "Secondary Market" and the terms appearing under the caption “General Terms of
the Notes” in the product prospectus supplement, as modified by this terms supplement.
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Fixed Coupon Barrier Notes
Royal Bank of Canada
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Fixed Coupon Barrier Notes
Royal Bank of Canada
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Hypothetical Final Stock Price of
the Reference Stock |
Payment at Maturity as
Percentage of Principal Amount
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Payment at Maturity
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$150.00
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100.00%
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$1,000.00
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$140.00
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100.00%
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$1,000.00
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$130.00
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100.00%
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$1,000.00
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$120.00
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100.00%
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$1,000.00
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$110.00
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100.00%
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$1,000.00
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$100.00
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100.00%
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$1,000.00
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$90.00
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100.00%
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$1,000.00
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$80.00
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100.00%
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$1,000.00
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$70.00
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100.00%
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$1,000.00
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$60.00
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100.00%
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$1,000.00
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$50.00
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100.00%
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$1,000.00
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$49.99
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49.99%
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$499.90
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$40.00
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40.00%
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$400.00
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$30.00
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30.00%
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$300.00
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$20.00
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20.00%
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$200.00
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$10.00
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10.00%
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$100.00
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$0.00
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0%
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$0.00
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Fixed Coupon Barrier Notes
Royal Bank of Canada
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Fixed Coupon Barrier Notes
Royal Bank of Canada
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• |
You May Lose All or a Portion of the Principal Amount at Maturity — Investors in the Notes could lose all or a substantial portion of their principal amount if there
is a decline in the closing price of the Reference Stock between the Trade Date and the Valuation Date. If the Final Stock Price is less than the Barrier Price, the amount of cash that you receive at maturity will represent a loss of
your principal that is proportionate to the decline in the closing price of the Reference Stock from the Trade Date to the Valuation Date. The rate of interest payable on the Notes may not be sufficient to compensate for any such
loss.
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The Payments on the Notes Are Limited — The payments on the Notes will be limited to the Coupon Payments. Accordingly, your return on the Notes may be less than your
return would be if you made an investment in the Reference Stock or in a security directly linked to the positive performance of the Reference Stock.
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Your Return on the Notes May Be Lower than the Return on a Conventional Debt Security of Comparable Maturity — The return that you will receive on the Notes, which
could be negative, may be less than the return you could earn on other investments. Even if your return is positive, your return may be less than the return you would earn if you purchased one of our conventional senior interest
bearing debt securities.
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Payments on the Notes Are Subject to Our Credit Risk, and Changes in Our Credit Ratings Are Expected to Affect the Market Value of the Notes — The Notes are our
senior unsecured debt securities. As a result, the amount due on any relevant payment date is dependent upon our ability to repay our obligations on that date. This will be the case even if the price of the Reference Stock increases
after the Trade Date. No assurance can be given as to what our financial condition will be during the term of the Notes.
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There May Not Be an Active Trading Market for the Notes-Sales in the Secondary Market May Result in Significant Losses — There may be little or no secondary market
for the Notes. The Notes will not be listed on any securities exchange. RBCCM and our other affiliates may make a market for the Notes; however, they are not required to do so. RBCCM or any of our other affiliates may stop any
market-making activities at any time. Even if a secondary market for the Notes develops, it may not provide significant liquidity or trade at prices advantageous to you. We expect that transaction costs in any secondary market would
be high. As a result, the difference between bid and asked prices for your Notes in any secondary market could be substantial.
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The Initial Estimated Value of the Notes Will Be Less than the Price to the Public —The initial estimated value that will be set forth on the cover page of the final
pricing supplement for the Notes does not represent a minimum price at which we, RBCCM or any of our affiliates would be willing to purchase the Notes in any secondary market (if any exists) at any time. If you attempt to sell the
Notes prior to maturity, their market value may be lower than the price you paid for them and the initial estimated value. This is due to, among other things, changes in the price of the Reference Stock, the borrowing rate we pay to
issue securities of this kind, and the inclusion in the price to the public of the underwriting discount and the estimated costs relating to our hedging of the Notes. These factors, together with various credit, market and economic
factors over the term of the Notes, are expected to reduce the price at which you may be able to sell the Notes in any secondary market and will affect the value of the Notes in complex and unpredictable ways. Assuming no change in
market conditions or any other relevant factors, the price, if any, at which you may be able to sell your Notes
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Fixed Coupon Barrier Notes
Royal Bank of Canada
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The Initial Estimated Value of the Notes that We Will Provide in the Final Pricing Supplement Will Be an Estimate Only, Calculated as of the Time the Terms of the Notes Are
Set —The initial estimated value of the Notes will be based on the value of our obligation to make the payments on the Notes, together with the mid-market value of the derivative embedded in the terms of the Notes. See
“Structuring the Notes” below. Our estimate will be based on a variety of assumptions, including our credit spreads, expectations as to dividends, interest rates and volatility, and the expected term of the Notes. These assumptions
are based on certain forecasts about future events, which may prove to be incorrect. Other entities may value the Notes or similar securities at a price that is significantly different than we do.
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Our Business Activities May Create Conflicts of Interest — We and our affiliates expect to engage in trading activities related to the Reference Stock that are not
for the account of holders of the Notes or on their behalf. These trading activities may present a conflict between the holders’ interests in the Notes and the interests we and our affiliates will have in their proprietary accounts,
in facilitating transactions, including options and other derivatives transactions, for their customers and in accounts under their management. These trading activities, if they influence the share price of the Reference Stock, could
be adverse to the interests of the holders of the Notes. We and one or more of our affiliates may, at present or in the future, engage in business with the Reference Stock Issuer, including making loans to or providing advisory
services. These services could include investment banking and merger and acquisition advisory services. These activities may present a conflict between our or one or more of our affiliates’ obligations and your interests as a holder
of the Notes. Moreover, we and our affiliates may have published, and in the future expect to publish, research reports with respect to the Reference Stock. This research is modified from time to time without notice and may express
opinions or provide recommendations that are inconsistent with purchasing or holding the Notes. Any of these activities by us or one or more of our affiliates may affect the price of the Reference Stock, and, therefore, the market
value of the Notes.
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Owning the Notes Is Not the Same as Owning the Reference Stock — The return on your Notes is unlikely to reflect the return you would realize if you actually owned
shares of the Reference Stock. For instance, you will not receive or be entitled to receive any dividend payments or other distributions on the Reference Stock during the term of your Notes. As an owner of the Notes, you will not have
voting rights or any other rights that holders of the Reference Stock may have. Furthermore, the Reference Stock may appreciate substantially during the term of the Notes, while your potential return will be limited to the Coupon
Payments.
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There Is No Affiliation Between the Reference Stock Issuer and RBCCM, and RBCCM Is Not Responsible for any Disclosure by the Reference Stock Issuer — We are not
affiliated with the Reference Stock Issuer. However, we and our affiliates may currently, or from time to time in the future engage, in business with the Reference Stock Issuer. Nevertheless, neither we nor our affiliates assume any
responsibilities for the accuracy or the completeness of any information that any other company prepares. You, as an investor in the Notes, should make your own investigation into the Reference Stock. The Reference
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Fixed Coupon Barrier Notes
Royal Bank of Canada
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The Payments on the Notes Are Subject to Postponement Due to Market Disruption Events and Adjustments —The payment at maturity and the Valuation Date are subject to
adjustment as described in the product prospectus supplement. For a description of what constitutes a market disruption event as well as the consequences of that market disruption event, see “General Terms of the Notes—Consequences of
Market Disruption Events” in the product prospectus supplement.
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Fixed Coupon Barrier Notes
Royal Bank of Canada
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Fixed Coupon Barrier Notes
Royal Bank of Canada
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Fixed Coupon Barrier Notes
Royal Bank of Canada
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Fixed Coupon Barrier Notes
Royal Bank of Canada
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Fixed Coupon Barrier Notes
Royal Bank of Canada
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