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 December 2, 2022
Pricing Supplement Dated December __, 2022 to the Product Prospectus Supplement No. CCBN-1, the Prospectus Supplement and the Prospectus, Each Dated September 14, 2021
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Auto-Callable Contingent Coupon Barrier Notes with Memory
Coupon, Each Linked to a Different Reference Stock, Due
December 18, 2025
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:
|
December 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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December 20, 2022
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Maturity Date:
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December 18, 2025
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Observation Dates:
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Quarterly, as set forth below.
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Coupon Payment Dates:
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Quarterly, as set forth below.
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Valuation Date:
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December 15, 2025
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Contingent Coupon Rate:
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As set forth in the table below (to be determined on the Trade Date)
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Initial Stock Price:
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The closing price of the applicable Reference Stock on the Trade Date.
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Final Stock Price:
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The closing price of the applicable Reference Stock on the Valuation Date.
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Call Stock Price:
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100% of the applicable Initial Stock Price.
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Trigger Price and Coupon
Barrier: |
A percentage of the applicable Initial Stock Price, as set forth in the table below.
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Contingent Coupon and
Memory Coupon Feature:
|
If the closing price of the applicable Reference Stock is greater than or equal to the Coupon Barrier on the applicable Observation Date, we will pay the Contingent Coupon applicable to that
Observation Date, together with any Contingent Coupons that were not previously paid. You may not receive any Contingent Coupons during the term of the Notes.
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Payment at Maturity (if held
to maturity): |
If the applicable Notes are not previously called, we will pay you at maturity an amount based on the applicable Final Stock Price:
For each $1,000 in principal amount, $1,000, unless the Final Stock Price is less than the Trigger Price. You will also receive the final Contingent Coupon (and any
previously unpaid Contingent Coupons) if the Final Stock Price is greater than the Coupon Barrier.
If the Final Stock Price is less than the Trigger Price, then the investor will receive at maturity, for each $1,000 in principal amount, a cash payment equal to: $1,000 + ($1,000 x
Reference Stock Return)
Investors in the Notes will lose some or all of their principal amount if the Final Stock Price is less than the Trigger Price.
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Call Feature:
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If the closing price of the applicable Reference Stock is greater than or equal to the Call Stock Price starting on June 15, 2023 and on any Observation Date thereafter, the Notes will be
automatically called for 100% of their principal amount, plus the Contingent Coupon applicable to the corresponding Observation Date, together with any unpaid Contingent Coupons.
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Call Settlement Dates:
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The Coupon Payment Date corresponding to that Observation Date.
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Reference Stock
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CUSIP
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Contingent Coupon
Rate (Per Annum)* |
Initial
Stock
Price
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Trigger Price
and Coupon
Barrier
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Estimated
Initial
Value(1)
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Price to
Public(2) |
Underwriting
Discounts and
Commissions(2)
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Proceeds to
Royal Bank of
Canada
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||||||||
FedEx Corporation.
("FDX")
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78016HEL0
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[10.00%-11.00%]
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$[]
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65%
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$895 to $945
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100.00%
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2.25%
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97.75%
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||||||||
Occidental Petroleum Corporation. ("OXY")
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78016HEU0
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[10.50%-11.50%]
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$[]
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55%
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$890 to $940
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100.00%
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2.25%
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97.75%
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||||||||
Uber Technologies, Inc. ("UBER")
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78016HEW6
|
[13.00%-14.00%]
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$[]
|
50%
|
$874 to $924
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100.00%
|
2.25%
|
97.75%
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|
|
Auto-Callable Contingent Coupon Barrier Notes with
Memory Coupon
|
General:
|
This terms supplement relates to offerings of Auto-Callable Contingent Coupon Barrier Notes with Memory Coupon (the “Notes”), each linked to one of the Reference Stocks set
forth above.
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Issuer:
|
Royal Bank of Canada (“Royal Bank”)
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Trade Date:
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December 15, 2022
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Issue Date:
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December 20, 2022
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Valuation Date:
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December 15, 2025
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Maturity Date:
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December 18, 2025
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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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Contingent Coupon and
Memory Coupon
Feature:
|
We will pay you a Contingent Coupon during the term of the Notes, periodically in arrears on each Coupon Payment Date, under the conditions described below:
• If the
closing price of the applicable Reference Stock is greater than or equal to the Coupon Barrier on the applicable Observation Date, we will pay the Contingent Coupon applicable to that Observation Date, together with any Contingent Coupons
that were previously unpaid.
• If the
closing price of the applicable Reference Stock is less than the Coupon Barrier on the applicable Observation Date, we will not pay you the Contingent Coupon applicable to that Observation Date.
You may not receive a Contingent Coupon for one or more quarterly periods during the term of your Notes. For the avoidance of doubt, if an unpaid
Contingent Coupon is paid on a subsequent Coupon Payment Date, that unpaid Contingent Coupon will not be paid on any subsequent Coupon Payment Date.
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Contingent Coupon Rate:
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As set forth on the cover page for each of the Notes, to be determined on the Trade Date.
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Observation Dates and
Coupon Payment Dates:
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Quarterly, as set forth in the table below:
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Observation Dates
|
Coupon Payment Dates
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March 15, 2023
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March 20, 2023
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June 15, 2023
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June 21, 2023
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September 15, 2023
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September 20, 2023
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December 15, 2023
|
December 20, 2023
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March 15, 2024
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March 20, 2024
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June 17, 2024
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June 21, 2024
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September 16, 2024
|
September 19, 2024
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December 16, 2024
|
December 19, 2024
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March 17, 2025
|
March 20, 2025
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June 16, 2025
|
June 20, 2025
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September 15, 2025
|
September 18, 2025
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December 15, 2025 (the
Valuation Date)
|
December 18, 2025 (the
Maturity Date)
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|
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Auto-Callable Contingent Coupon Barrier Notes with
Memory Coupon
|
Record Dates:
|
The record date for each Coupon Payment Date will be one business day prior to that scheduled Coupon Payment Date; provided, however, that any Contingent Coupons payable at
maturity or upon a call of the applicable Notes will be payable to the person to whom the payment at maturity or upon the call, as the case may be, will be payable.
|
Call Feature:
|
If, starting on June 15, 2023 and on any Observation Date thereafter, the closing price of the applicable Reference Stock is greater
than or equal to the Call Stock Price, then the appliable Notes will be automatically called.
|
Call Settlement Dates:
|
If the applicable Notes are called on any Observation Date starting on June 15, 2023 and thereafter, the Call Settlement Date for those Notes will be the Coupon Payment Date
corresponding to that Observation Date.
|
Payment if Called:
|
If the applicable Notes are automatically called, then, on the applicable Call Settlement Date, for each $1,000 in principal amount, you will receive $1,000 plus the
Contingent Coupon otherwise due on that Call Settlement Date and any previously unpaid Contingent Coupons.
|
Initial Stock Price:
|
The closing price of the applicable Reference Stock on the Trade Date.
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Final Stock Price:
|
The closing price of the applicable Reference Stock on the Valuation Date.
|
Call Stock Price:
|
100% of the applicable Initial Stock Price.
|
Trigger Price and
Coupon Barrier:
|
A percentage of the applicable Initial Stock Price, as set forth on the cover page of this document.
|
Payment at Maturity (if
not previously called and
held to maturity):
|
If the applicable Notes are not previously called, we will pay you at maturity an amount based on the applicable Final Stock Price:
• If the
Final Stock Price is greater than or equal to the Trigger Price, we will pay you a cash payment equal to the principal amount. You will also receive the final Contingent Coupon (and any previously unpaid Contingent Coupons) if the Final
Stock Price is greater than the Coupon Barrier.
• If the
Final Stock Price is below the Trigger 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 in this case will be less than your principal amount, if anything, resulting in a loss that is proportionate to the decline of the
applicable 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 applicable Final Stock Price is less than the Trigger
Price.
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Reference Stock Return:
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As to each of the Notes,
Final Stock Price – Initial Stock Price
Initial Stock Price
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Stock Settlement:
|
Not applicable. Payments on the Notes will be made solely in cash.
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Market Disruption
Events:
|
The occurrence of a market disruption event (or a non-trading day) as to the applicable Reference Stock will result in the postponement of an Observation Date or the Valuation
Date, as described in the product prospectus supplement.
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Calculation Agent:
|
RBC Capital Markets, LLC (“RBCCM”)
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U.S. Tax Treatment:
|
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 a
callable pre-paid cash-settled contingent income-bearing derivative contract linked to the Reference Stock for U.S. federal income tax purposes. 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
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|
|
Auto-Callable Contingent Coupon Barrier Notes with
Memory Coupon
|
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 Ashurst LLP, our special U.S. tax counsel) 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:
|
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.
|
Listing:
|
The Notes will not be listed on any securities exchange.
|
Settlement:
|
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).
|
Terms Incorporated in
the Master Note:
|
All of the terms appearing on the cover page and above the item captioned “Secondary Market” on pages P-2 and P-3 of this terms supplement and the terms appearing under the
caption “General Terms of the Notes” in the product prospectus supplement dated September 14, 2021, as modified by this terms supplement.
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|
Auto-Callable Contingent Coupon Barrier Notes with
Memory Coupon
|
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|
Auto-Callable Contingent Coupon Barrier Notes with
Memory Coupon
|
Hypothetical Initial Stock Price:
|
$100.00*
|
|
Hypothetical Trigger Price and Coupon Barrier:
|
$80.00, which is 80% of the hypothetical Initial Stock Price
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Observation Dates:
|
Quarterly
|
|
Principal Amount:
|
$1,000 per Note
|
Hypothetical Final Stock Price
|
Payment at Maturity as Percentage of
Principal Amount
|
Cash Payment Amount per $1,000 in Principal
Amount
|
$180.00
|
100.00%*
|
$1,000.00*
|
$170.00
|
100.00%*
|
$1,000.00*
|
$160.00
|
100.00%*
|
$1,000.00*
|
$150.00
|
100.00%*
|
$1,000.00*
|
$140.00
|
100.00%*
|
$1,000.00*
|
$130.00
|
100.00%*
|
$1,000.00*
|
$120.00
|
100.00%*
|
$1,000.00*
|
$110.00
|
100.00%*
|
$1,000.00*
|
$100.00
|
100.00%*
|
$1,000.00*
|
$90.00
|
100.00%*
|
$1,000.00*
|
$80.00
|
100.00%*
|
$1,000.00*
|
$79.99
|
79.99%
|
$799.90
|
$70.00
|
70.00%
|
$700.00
|
$60.00
|
60.00%
|
$600.00
|
$50.00
|
50.00%
|
$500.00
|
$40.00
|
40.00%
|
$400.00
|
$30.00
|
30.00%
|
$300.00
|
$20.00
|
20.00%
|
$200.00
|
$10.00
|
10.00%
|
$100.00
|
$0.00
|
0.00%
|
$0.00
|
|
|
Auto-Callable Contingent Coupon Barrier Notes with
Memory Coupon
|
|
|
Auto-Callable Contingent Coupon Barrier Notes with
Memory Coupon
|
• |
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 trading price of the applicable Reference Stock between the Trade Date and the Valuation Date. If the Notes are not automatically called and the applicable Final Stock Price is less than its Trigger Price, the amount that you
receive at maturity will represent a loss of your principal that is proportionate to the decline in the closing price of the applicable Reference Stock from the Trade Date to the Valuation Date. Any Contingent Coupons received on the Notes
prior to the Maturity Date may not be sufficient to compensate for any such loss.
|
• |
The Notes Are Subject to an Automatic Call — If on any Observation Date beginning with the second Observation Date, the closing price of the applicable Reference Stock is
greater than or equal to the Call Stock Price, then the Notes will be automatically called. If the Notes are automatically called, then, on the applicable Call Settlement Date, for each $1,000 in principal amount, you will receive $1,000
plus the Contingent Coupon otherwise due on the applicable Call Settlement Date (together with any previously unpaid Contingent Coupons). You will not receive any Contingent Coupons after the Call Settlement Date. You may be unable to
reinvest your proceeds from the automatic call in an investment with a return that is as high as the return on the Notes would have been if they had not been called.
|
• |
You May Not Receive Any Contingent Coupons — We will not necessarily make any coupon payments on the Notes. If the closing price of the applicable Reference Stock on an
Observation Date is less than the Coupon Barrier, we will not pay you the Contingent Coupon applicable to that Observation Date. If the closing price of the applicable Reference Stock is less than the Coupon Barrier on each of the
Observation Dates and on the Valuation Date, we will not pay you any Contingent Coupons during the term of, and you will not receive a positive return on your Notes. Generally, this non-payment of the Contingent Coupon coincides with a
period of greater risk of principal loss on your Notes. Accordingly, if we do not pay the Contingent Coupon on the Maturity Date, you will also incur a loss of principal, because the appliable Final Stock Price will be less than its Trigger
Price. Notwithstanding the memory coupon feature of the Notes, it is possible that any unpaid Contingent Coupons will remain unpaid for the remaining term of the applicable Notes.
|
• |
The Call Feature and the Contingent Coupon Feature Limit Your Potential Return — The return potential of the Notes is limited to the pre-specified Contingent Coupon Rate,
regardless of the appreciation of the applicable Reference Stock. In addition, the total return on your Notes will vary based on the number of Observation Dates on which the Contingent Coupon becomes payable prior to maturity or an
automatic call. Further, if the Notes are called due to the Call Feature, you will not receive any Contingent Coupons or any other payment in respect of any Observation Dates after the applicable Call Settlement Date. Since your Notes could
be called as early as the second Observation Date, the total return on the Notes could be minimal. If your Notes are not called, you may be subject to the full downside performance of the applicable Reference Stock, even though your
potential return is limited to the applicable Contingent Coupon Rate. As a result, the return on an investment in the Notes could be less than the return on a direct investment in the applicable Reference Stock.
|
• |
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 your 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, your receipt of any Contingent Coupons, if payable, and the amount due on any relevant payment date is dependent upon our ability to repay our obligations on the applicable payment dates. This will be
the case even if
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|
|
Auto-Callable Contingent Coupon Barrier Notes with
Memory Coupon
|
• |
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 other affiliate of ours 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.
|
• |
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 in the final pricing supplement for
each of 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 applicable 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 your 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 prior to maturity may be less than your original purchase price, as any such sale price would not be expected to include the underwriting discount or the
hedging costs relating to the Notes. In addition to bid-ask spreads, the value of your Notes determined by RBCCM for any secondary market price is expected to be based on the secondary rate rather than the internal funding rate used to
price the Notes and determine the initial estimated value. As a result, the secondary price will be less than if the internal funding rate was used. The Notes are not designed to be short-term trading instruments. Accordingly, you should be
able and willing to hold your Notes to maturity.
|
• |
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 each 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.
|
• |
Our Business Activities May Create Conflicts of Interest — We and our affiliates expect to engage in trading activities related to the Reference Stocks 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 applicable 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 a Reference Stock, could be
adverse to the interests of the holders of the applicable Notes. We and one or more of our affiliates may, at present or in the future, engage in business with the Reference Stock Issuers, including making loans to or providing advisory
services. These services could
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|
|
Auto-Callable Contingent Coupon Barrier Notes with
Memory Coupon
|
• |
Owning the Notes Is Not the Same as Owning the Applicable Reference Stock — The return on your Notes is unlikely to reflect the return you would realize if you actually
owned shares of the applicable Reference Stock. For instance, you will not receive or be entitled to receive any dividend payments or other distributions on the applicable 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 applicable Reference Stock may have. Furthermore, the applicable Reference Stock may appreciate substantially during the term of the Notes, while your potential
return will be limited to the applicable Contingent Coupon payments.
|
• |
There Is No Affiliation Between the Reference Stock Issuers and RBCCM, and RBCCM Is Not Responsible for any Disclosure by any Reference Stock Issuer — We are not affiliated with the Reference Stock Issuers. However, we and our affiliates may currently, or from time to time in the future engage, in business with the Reference Stock Issuers. 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 applicable Reference Stock. The
Reference Stock Issuers are not involved in the offerings of the Notes and have no obligation of any sort with respect to your Notes. The Reference Stock Issuers have no obligation to take your interests into consideration for any reason,
including when taking any corporate actions that might affect the value of your Notes.
|
• |
The Payments on the Notes Are Subject to Postponement Due to Market Disruption Events and Adjustments — The payment at maturity, each Observation Date 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—Market Disruption Events” in the product prospectus supplement.
|
• |
UBER Has Limited Historical Information — UBER commenced trading on May 10, 2019. Because that Reference Stock has limited trading history, your investment in the Notes
linked to UBER may involve a greater risk than investing in securities linked to one or more equity securities with a more established record of performance.
|
|
|
Auto-Callable Contingent Coupon Barrier Notes with
Memory Coupon
|
|
|
Auto-Callable Contingent Coupon Barrier Notes with
Memory Coupon
|
|
|
Auto-Callable Contingent Coupon Barrier Notes with
Memory Coupon
|
|
|
Auto-Callable Contingent Coupon Barrier Notes with
Memory Coupon
|
|
|
Auto-Callable Contingent Coupon Barrier Notes with
Memory Coupon
|
|
|
Auto-Callable Contingent Coupon Barrier Notes with
Memory Coupon
|
|
|
Auto-Callable Contingent Coupon Barrier Notes with
Memory Coupon
|