Key Terms (Subject to Change):
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Issuer:
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Royal Bank of Canada (“RBC”)
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CUSIP:
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78016HLY4
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Trade Date:
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January 13, 2023 (expected)
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Issue Date:
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January 19, 2023 (expected)
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Valuation Date:
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January 16, 2024 (expected)
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Maturity Date:
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January 19, 2024 (expected)
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Reference Stock:
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Tesla, Inc. ("TSLA”)
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Coupon Payment
Dates:
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Monthly, beginning in February 2023
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Coupon Rate:
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[15.00%-16.00%] per annum (to be determined on the Trade Date).
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Call Feature:
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Not applicable.
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Barrier Price:
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50% of the Initial Stock Price
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Payment at Maturity:
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We will pay you at maturity, in addition to the final Coupon, 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 Barrier Price.
If the Final Stock Price is less than the Barrier Price, you will lose 1% of the principal amount for each 1% decrease in the price of the Reference Stock.
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Initial Stock Price:
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The closing share price of the Reference Stock on the Trade Date.
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Final Stock Price:
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The closing share price of the Reference Stock on the Valuation Date.
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Underwriting Discount
and Commissions:
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2.25% of the principal amount.
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Product Characteristics
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The Notes will pay the fixed Coupon on each Coupon Payment Date, regardless of the performance of the Reference Stock.
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If the Final Stock Price is greater than or equal to the Barrier Price, the Notes will pay the principal amount plus the final Coupon.
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If the Final Stock Price is less than the Barrier Price, you will lose 1% of the principal amount of the Notes for each 1% decrease in the price of
the Reference Stock. You will also receive the final Coupon. You could lose your entire investment.
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Hypothetical Scenario Analysis
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COUPON PAYMENTS
DETERMINING PAYMENT AT MATURITY
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Key Product Risks
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This investment may result in a loss of up to 100% of principal. If the Final Stock Price is less than the Barrier Price, the amount of cash that you receive at maturity will represent a loss of
your principal that is proportionate to the decrease in the closing price of the Reference Stock from the Trade Date to the Valuation Date.
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The return potential of the Notes is limited to the Coupons, and you will not participate in any appreciation in the price of the Reference Stock, which may be significant.
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Although the return on the Notes at maturity will be based on the performance of the Reference Stock, the payment of all amounts due on the Notes is subject to RBC’s credit risk. Investors are
dependent on RBC’s ability to pay all amounts due on the Notes.
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Please see next page for additional risks.
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Investors could lose all or a substantial portion of their principal amount if there is a decrease in the trading price of the Reference Stock between the Trade Date and the Valuation Date. If the Final
Stock Price on the Valuation Date is less than the Barrier Price, the amount of cash that you receive at maturity will represent a loss of your principal that is proportionate to the decrease in the closing price of the Reference Stock from
the Trade Date to the Valuation Date. The Coupons received on the Notes on and prior to the Maturity Date may not be sufficient to compensate for any such loss.
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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.
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The initial estimated value that will be set forth in the final pricing supplement for the Notes is expected to be less than the principal amount, and 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.
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The Notes will not be listed on any securities exchange. RBC (or its affiliates) may offer to purchase the Notes in the secondary market but is not required to do so. Even if there is a secondary market,
it may not provide enough liquidity to allow you to trade or sell the Notes when you wish to do so. Because other dealers are not likely to make a secondary market for the Notes, the price at which you may be able to trade your Notes is
likely to depend on the price, if any, at which RBC (or its affiliates) is willing to buy the Notes. Sales of the Notes in the secondary market may result in significant losses.
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RBC and its affiliates play a variety of roles in connection with the issuance of the Notes, including acting as calculation agent and hedging RBC’s obligations under the Notes. In performing these
duties, the economic interests of the calculation agent and other affiliates of RBC are potentially adverse to your interests as an investor in the Notes.
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In addition to the price of the Reference Stock, the value of the Notes will be affected by a number of economic and market factors that may either offset or magnify each other, including the actual and
expected volatility of the Reference Stock, the amount of time remaining until maturity of the Notes, the dividend rate on the Reference Stock, interest and yield rates in the market generally, investors’ expectations with respect to the
rate of inflation, geopolitical conditions and a variety of economic, financial, political, regulatory and judicial events that affect the Reference Stock, and our creditworthiness, including actual or anticipated downgrades in our credit
ratings.
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