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 August 17, 2022
Pricing Supplement Dated August __, 2022 to the Product Prospectus Supplement No. CCBN-1 Dated September 14, 2021, the Prospectus Supplement Dated September 14, 2021 and the Prospectus
Dated September 14, 2021
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$_________
Auto-Callable Contingent Coupon Barrier Notes
with Memory Coupon Linked to the Common
Stock of Uber Technologies, Inc., Due September
4, 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:
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August 29, 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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August 31, 2022
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Maturity Date:
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September 4, 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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August 29, 2025
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Contingent Coupon Rate:
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[12.50% - 13.50%] per annum (to be determined on the Trade Date)
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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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Final Stock Price:
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The closing price of the Reference Stock on the Valuation Date.
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Call Stock Price:
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100% of the Initial Stock Price.
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Trigger Price and Coupon
Barrier:
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50% of the Initial Stock Price.
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Contingent Coupon and
Memory Coupon Feature:
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If the closing price of the 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):
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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:
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 + ($1,000 x Reference Stock Return)
Investors in the Notes will lose some or all of their principal amount if the Final Stock Price is less than the Trigger Price.
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Call Feature:
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If the closing price of the Reference Stock is greater than or equal to the Call Stock Price starting on February 28, 2023 and on any Observation Date thereafter, the Notes will be automatically called for
100% of their principal amount, plus the Contingent Coupon applicable to the corresponding Observation Date, together with any unpaid Contingent Coupons.
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Call Settlement Dates:
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The Coupon Payment Date corresponding to that Observation Date.
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CUSIP:
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78016FSH8
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Per Note
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Total
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Price to public(1)
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100.00%
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$[_]
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Underwriting discounts and commissions(1)
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2.25%
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$[_]
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Proceeds to Royal Bank of Canada
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97.75%
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$[_]
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Auto-Callable Contingent Coupon Barrier Notes with
Memory Coupon
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General:
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This terms supplement relates to an offering of Auto-Callable Contingent Coupon Barrier Notes with Memory Coupon (the “Notes”) linked to the common stock of Uber
Technologies, Inc.
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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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August 29, 2022
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Issue Date:
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August 31, 2022
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Valuation Date:
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August 29, 2025
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Maturity Date:
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September 4, 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:
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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 the 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 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 the 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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[12.50% - 13.50%] per annum ([3.125%-3.375%] per quarter), to be determined on the Trade Date.
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Observation Dates:
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Quarterly, on November 29, 2022, February 28, 2023, May 30, 2023, August 29, 2023, November 29, 2023, February 29, 2024, May 29, 2024, August 29, 2024, November 29, 2024,
February 28, 2025, May 29, 2025 and the Valuation Date.
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Coupon Payment Dates:
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The Contingent Coupon, if payable, will be paid quarterly on December 2, 2022, March 3, 2023, June 2, 2023, September 1, 2023, December 4, 2023, March 5, 2024, June 3, 2024,
September 4, 2024, December 4, 2024, March 5, 2025, June 3, 2025 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 any Contingent Coupons 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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Call Feature:
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If, starting on February 28, 2023 and on any Observation Date thereafter, the closing price of the Reference Stock is greater than or equal to the Call Stock Price, then the Notes will be
automatically called.
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Auto-Callable Contingent Coupon Barrier Notes with
Memory Coupon
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Call Settlement Dates:
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If the Notes are called on any Observation Date starting on February 28, 2023 and thereafter, the Call Settlement Date will be the Coupon Payment Date corresponding to that Observation
Date.
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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 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.
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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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Final Stock Price:
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The closing price of the Reference Stock on the Valuation Date.
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Call Stock Price:
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100% of the Initial Stock Price.
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Trigger Price and
Coupon Barrier:
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50% of the 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:
• 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 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 Stock Price is less than the Trigger 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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Stock Settlement:
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Not applicable. Payments on the Notes will be made solely in cash.
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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 the 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:
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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 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 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:
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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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Auto-Callable Contingent Coupon Barrier Notes with
Memory Coupon
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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 with
Memory Coupon
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Auto-Callable Contingent Coupon Barrier Notes with
Memory Coupon
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Hypothetical Initial Stock Price:
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$100.00*
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Hypothetical Trigger Price and Coupon Barrier:
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$50.00, which is 50% of the hypothetical Initial Stock Price
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Hypothetical Contingent Coupon Rate:
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13.00% per annum (or 3.25% per quarter), which is the midpoint of the Contingent Coupon Rate range set forth above.
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Hypothetical Contingent Coupon Amount:
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$32.50 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
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Payment at Maturity as
Percentage of Principal
Amount
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Cash Payment Amount per
$1,000 in Principal Amount
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$180.00
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100.00%*
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$1,000.00*
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$170.00
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100.00%*
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$1,000.00*
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$160.00
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100.00%*
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$1,000.00*
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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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0.00%
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$0.00
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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
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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 trading price of the Reference Stock between the Trade Date and the Valuation Date. If the Notes are not automatically called and the Final Stock Price is less than the 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 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 February 2023, the closing price of the 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.
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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 the 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 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 Final Stock Price will be less than the 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 Notes.
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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 Stock. 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 the second Observation Date, 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 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 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, 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
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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 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.
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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 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 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 and 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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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
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Auto-Callable Contingent Coupon Barrier Notes with
Memory Coupon
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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 applicable
Contingent 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
Stock Issuer is not involved in this offering and has no obligation of any sort with respect to your Notes. The Reference Stock Issuer has 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.
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The Payments on the Notes Are Subject 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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The Reference Stock Has Limited Historical Information — Uber Technologies, Inc. commenced trading on May 10, 2019. Because the Reference Stock has limited trading
history, your investment in the Notes may involve a greater risk than investing in securities linked to one or more equity securities with a more established record of performance.
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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
|
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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
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