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 March 30, 2023
Pricing Supplement Dated March __, 2023 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
Linked to the Lesser Performing of Three Equity
Securities, Due April 6, 2026
Royal Bank of Canada
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Reference Stocks
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Initial Stock Prices*
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Coupon Barriers and Trigger Prices
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Bank of America Corporation (“BAC”)
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70% of its Initial Stock Price
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JPMorgan Chase & Co. (“JPM”)
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70% of its Initial Stock Price
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Wells Fargo & Company (“WFC”)
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70% of its Initial Stock Price
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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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March 31, 2023
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Principal Amount:
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$1,000 per Note
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Issue Date:
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April 5, 2023
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Maturity Date:
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April 6, 2026
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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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March 31, 2026
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Contingent Coupon Rate:
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At least 16.00% per annum (to be determined on the Trade Date)
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Contingent Coupon:
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If the closing price of each Reference Stock is greater than or equal to its Coupon Barrier on the applicable Observation Date, we
will pay the Contingent Coupon applicable to the corresponding Observation Date. You may not receive any Contingent Coupons during the term of the Notes.
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Payment at Maturity (if held
to maturity):
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If the Notes are not previously called, we will pay you at maturity an amount based on the Final Stock Price of the Lesser Performing Reference Stock:
For each $1,000 in principal amount, $1,000 plus the Contingent Coupon at maturity, unless the Final Stock Price of the Lesser Performing Reference Stock is less than its Trigger Price.
If the Final Stock Price of the Lesser Performing Reference Stock is less than its Trigger Price, then the investor will receive at maturity, for each $1,000 in principal amount, a cash payment
equal to:
$1,000 + ($1,000 x Reference Stock Return of the Lesser Performing Reference Stock)
Investors could lose some or all of their principal amount if the Final Stock Price of the Lesser Performing Reference Stock is below its Trigger Price.
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Lesser Performing
Reference Stock:
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The Reference Stock with the lowest Reference Stock Return.
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Call Feature:
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If the closing price of each Reference Stock is greater than or equal to its Initial Stock Price starting on June 30, 2023 and on any Observation Date thereafter, the Notes will be automatically called for 100% of their principal amount, plus the Contingent Coupon applicable to the corresponding Observation
Date.
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Call Settlement Dates:
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The Coupon Payment Date corresponding to that Observation Date.
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Final Stock Price:
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For each Reference Stock, its closing price on the Valuation Date.
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CUSIP:
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78016HWT3
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Per Note
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Total
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Price to public(1)
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100.00%
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$
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Underwriting discounts and commissions(1)
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2.00%
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$
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Proceeds to Royal Bank of Canada
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98.00%
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$
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Auto-Callable Contingent Coupon Barrier Notes
Linked to the Lesser Performing of Three Equity Securities Royal Bank of Canada |
General:
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This terms supplement relates to an offering of Auto-Callable Contingent Coupon Barrier Notes (the “Notes”) linked to the lesser performing of three equity securities
(the “Reference Stocks”).
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Issuer:
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Royal Bank of Canada (“Royal Bank”)
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Trade Date:
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March 31, 2023
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Issue Date:
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April 5, 2023
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Valuation Date:
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March 31, 2026
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Maturity Date:
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April 6, 2026
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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:
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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 each Reference Stock is greater than or equal to its Coupon Barrier on the applicable Observation Date, we will pay the Contingent Coupon applicable to that Observation Date.
• If the
closing price of any of the Reference Stocks is less than its 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 the Notes.
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Contingent Coupon
Rate:
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At least 16.00% per annum (4.00% per quarter), to be determined on the Trade Date.
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Observation Dates and
Coupon Payment
Dates:
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Observation Dates:
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Coupon Payment Dates:
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June 30, 2023
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July 6, 2023
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September 29, 2023
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October 4, 2023
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December 29, 2023
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January 4, 2024
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March 28, 2024
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April 3, 2024
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June 28, 2024
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July 3, 2024
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September 30, 2024
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October 3, 2024
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December 31, 2024
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January 6, 2025
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March 31, 2025
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April 3, 2025
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June 30, 2025
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July 3, 2025
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September 30, 2025
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October 3, 2025
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December 31, 2025
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January 6, 2026
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March 31, 2026 (Valuation Date)
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April 6, 2026 (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 any Contingent Coupon payable at
maturity or upon a call will be payable to the person to whom the payment at maturity or upon the call, as the case may be, will be payable.
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Auto-Callable Contingent Coupon Barrier Notes
Linked to the Lesser Performing of Three Equity Securities Royal Bank of Canada |
Call Feature:
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If, starting on June 30, 2023 and on any Observation Date thereafter, the closing price of each Reference Stock is greater than or
equal to its Initial Stock Price, then the Notes will be automatically called.
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Payment if Called:
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If the Notes are automatically called, then, on the applicable Call Settlement Date, for each $1,000 principal amount, you will receive $1,000 plus the Contingent Coupon
otherwise due on that Call Settlement Date.
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Call Settlement Dates:
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If the Notes are called on any Observation Date, the Call Settlement Date will be the Coupon Payment Date corresponding to that Observation Date.
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Initial Stock Price:
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For each Reference Stock, its closing price on the Trade Date.
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Final Stock Price:
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For each Reference Stock, its closing price on the Valuation Date.
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Trigger Price and
Coupon Barrier:
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For each Reference Stock, 70% of its Initial Stock Price.
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Payment at Maturity (if
not previously called
and held to maturity):
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If the Notes are not previously called, we will pay you at maturity an amount based on the Final Stock Price of the Lesser Performing Reference Stock:
• If the Final Stock Price of the Lesser
Performing Reference Stock is greater than or equal to its Trigger Price, we will pay you a cash payment equal to the principal amount plus the Contingent Coupon otherwise due on the Maturity Date.
• If the Final Stock Price of the Lesser
Performing Reference Stock is below its 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 of the Lesser Performing Reference Stock)
The amount that you will 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 Lesser
Performing 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 Stock Price of the Lesser Performing Reference
Stock is less than its Trigger Price.
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Stock Settlement:
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Not applicable. Payments on the Notes will be made solely in cash.
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Reference Stock
Return:
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With respect to each Reference Stock:
Final Stock Price – Initial Stock Price
Initial Stock Price
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Lesser Performing
Reference Stock:
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The Reference Stock with the lowest Reference Stock Return.
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Market Disruption
Events:
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The occurrence of a market disruption event (or a non-trading day) as to any of the Reference Stocks will result in the postponement of an Observation Date or the
Valuation Date as to that Reference Stock, as described in the product prospectus supplement, but not to any non-affected Reference Stock.
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Calculation Agent:
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RBC Capital Markets, LLC (“RBCCM”)
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Auto-Callable Contingent Coupon Barrier Notes
Linked to the Lesser Performing of Three Equity Securities Royal Bank of Canada |
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
a callable pre-paid cash-settled contingent income-bearing derivative contract linked to the Reference Stocks 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 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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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
Linked to the Lesser Performing of Three Equity Securities Royal Bank of Canada |
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Auto-Callable Contingent Coupon Barrier Notes
Linked to the Lesser Performing of Three Equity Securities Royal Bank of Canada |
Hypothetical Initial Stock Price:
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$100.00*
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Hypothetical Trigger Price and Coupon Barrier:
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$70.00, which is 70% of the hypothetical Initial Stock Price
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Hypothetical Contingent Coupon Rate:
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16.00% per annum (or 4.00% per quarter)
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Hypothetical Contingent Coupon Amount:
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$40.00 per quarter
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Observation Dates:
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Quarterly
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Principal Amount:
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$1,000 per Note
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Hypothetical Final Stock Price of
the Lesser Performing
Reference Stock
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Payment at Maturity as
Percentage of Principal Amount
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Payment at Maturity (assuming
that the Notes were not
previously called)
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$160.00
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104.00%*
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$1,040.00*
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$150.00
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104.00%*
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$1,040.00*
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$140.00
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104.00%*
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$1,040.00*
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$125.00
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104.00%*
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$1,040.00*
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$120.00
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104.00%*
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$1,040.00*
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$110.00
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104.00%*
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$1,040.00*
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$100.00
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104.00%*
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$1,040.00*
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$90.00
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104.00%*
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$1,040.00*
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$80.00
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104.00%*
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$1,040.00*
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$70.00
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104.00%*
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$1,040.00*
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$69.99
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69.99%
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$699.90
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$60.00
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60.00%
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$600.00
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$50.00
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50.00%
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$500.00
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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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0.00%
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$0.00
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Auto-Callable Contingent Coupon Barrier Notes
Linked to the Lesser Performing of Three Equity Securities Royal Bank of Canada |
|
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Auto-Callable Contingent Coupon Barrier Notes
Linked to the Lesser Performing of Three Equity Securities Royal Bank of Canada |
• |
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 Lesser Performing Reference Stock between the Trade Date and the Valuation Date. If the Notes are not called and the Final Stock Price of the Lesser Performing Reference Stock is less than its Trigger
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 Lesser Performing 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.
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• |
The Notes Are Subject to an Automatic Call — If on any Observation Date beginning in June 2023, the closing price of each Reference Stock is greater than or equal to its
Initial 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. 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.
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• |
You May Not Receive Any Contingent Coupons — We will not necessarily make any coupon payments on the Notes. If the closing price of any of the Reference Stocks on an
Observation Date is less than its Coupon Barrier, we will not pay you the Contingent Coupon applicable to that Observation Date. If the closing price of any of the Reference Stocks is less than its 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 Final Stock Price of the Lesser Performing Reference Stock will be
less than its Trigger Price.
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• |
The Notes Are Linked to the Lesser Performing Reference Stock, Even if the Other Reference Stocks Perform Better — If any of
the Reference Stocks has a Final Stock Price that is less than its Trigger Price, your return will be linked to the lesser performing of the three Reference Stocks. Even if the Final Stock Prices of the other Reference Stocks have
increased compared to their respective Initial Stock Prices, or have experienced a decrease that is less than that of the Lesser Performing Reference Stock, your return will only be determined by reference to the performance of the Lesser
Performing Reference Stock, regardless of the performance of the other Reference Stocks. Because each Reference Stock Issuer operates in the banking industry, they may each experience simultaneous and significant declines due to adverse
conditions in that industry.
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• |
Your Payment on the Notes Will Be Determined by Reference to Each Reference Stock Individually, Not to a Basket, and the Payment at Maturity Will Be Based on the Performance of
the Lesser Performing Reference Stock — The Payment at Maturity will be determined only by reference to the performance of the Lesser Performing Reference Stock, regardless of the performance of the other Reference Stocks. The
Notes are not linked to a weighted basket, in which the risk may be mitigated and diversified among each of the basket components. For example, in the case of notes linked to a weighted basket, the return would depend on the weighted
aggregate performance of the basket components reflected as the basket return. As a result, the depreciation of one basket component could be mitigated by the appreciation of the other basket components, as scaled by the weighting of that
basket component. However, in the case of the Notes, the individual performance of each of the Reference Stocks would not be combined, and the depreciation of one Reference Stock would not be mitigated by any appreciation of the other
Reference Stocks. Instead, your return will depend solely on the Final Stock Price of the Lesser Performing Reference Stock.
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Auto-Callable Contingent Coupon Barrier Notes
Linked to the Lesser Performing of Three Equity Securities Royal Bank of Canada |
• |
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 Reference Stocks. In addition, the total return on the 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 the Notes could be called as
early as June 2023, the total return on the Notes could be minimal. If the Notes are not called, you may be subject to the full downside performance of the Lesser Performing Reference Stock even though your potential return is limited to
the 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 Reference Stocks.
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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, 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 the prices of the Reference Stocks increase 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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• |
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.
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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 in 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 prices of the Reference Stocks, 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 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 the 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.
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|
|
Auto-Callable Contingent Coupon Barrier Notes
Linked to the Lesser Performing of Three Equity Securities Royal Bank of Canada |
• |
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 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 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 Stocks, 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 issuers of the Reference Stocks (the “Reference Stock Issuers"), 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 Stocks. 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 share prices of the Reference Stocks, and,
therefore, the market value of the Notes.
|
• |
The Reference Stocks Are Concentrated in the Financial Sector — All of the Reference Stocks are issued by companies in the financial sector. Although an investment in the
Notes will not give holders any ownership or other direct interests in the Reference Stocks, the return on an investment in the Notes will be subject to certain risks associated with a direct equity investment in companies in the financial
services sector. Accordingly, by investing in the Notes, you will not benefit from the diversification which could result from an investment linked to companies that operate in multiple sectors.
|
• |
Owning the Notes Is Not the Same as Owning the Reference Stocks — The return on your Notes is unlikely to reflect the return you would realize if you actually owned shares
of the Reference Stocks. For instance, you will not receive or be entitled to receive any dividend payments or other distributions on these securities 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 these securities may have. Furthermore, the Reference Stocks may appreciate substantially during the term of the Notes, while your potential return will be limited to the applicable Contingent Coupon
payments.
|
|
|
Auto-Callable Contingent Coupon Barrier Notes
Linked to the Lesser Performing of Three Equity Securities Royal Bank of Canada |
• |
There Is No Affiliation Between the Reference Stock Issuers and RBCCM, and RBCCM Is Not Responsible for any Disclosure by the Reference Stock Issuers — 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 each 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 Stocks.
|
|
|
Auto-Callable Contingent Coupon Barrier Notes
Linked to the Lesser Performing of Three Equity Securities Royal Bank of Canada |
|
|
Auto-Callable Contingent Coupon Barrier Notes
Linked to the Lesser Performing of Three Equity Securities Royal Bank of Canada |
|
|
Auto-Callable Contingent Coupon Barrier Notes
Linked to the Lesser Performing of Three Equity Securities Royal Bank of Canada |
|
|
Auto-Callable Contingent Coupon Barrier Notes
Linked to the Lesser Performing of Three Equity Securities Royal Bank of Canada |
|
|
Auto-Callable Contingent Coupon Barrier Notes
Linked to the Lesser Performing of Three Equity Securities Royal Bank of Canada |
|
|
Auto-Callable Contingent Coupon Barrier Notes
Linked to the Lesser Performing of Three Equity Securities Royal Bank of Canada |
|
|
Auto-Callable Contingent Coupon Barrier Notes
Linked to the Lesser Performing of Three Equity Securities Royal Bank of Canada |