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 2, 2023
Pricing Supplement Dated March __, 2023 to the Product Prospectus Supplement No. CCBN-2, the Prospectus Supplement, and the Prospectus, Each Dated
September 14, 2021
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$__________
Contingent Coupon Barrier Notes with Memory
Coupon Linked to the Lesser Performing of Two
Equity Indices, Due March 6, 2025
Royal Bank of Canada
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Reference Indices
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Initial Levels
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Coupon Barriers and Trigger Levels
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Dow Jones Industrial AverageTM (“INDU”)
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75% of the Initial Level
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EURO STOXX 50® Index (“SX5E”)
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75% of the Initial Level
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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 3, 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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March 8, 2023
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Maturity Date:
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March 6, 2025
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Observation Dates:
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Monthly, as set forth below.
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Coupon Payment Dates:
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Monthly, as set forth below.
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Valuation Date:
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March 3, 2025
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Contingent Coupon Rate:
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At least 9.15% per annum (to be determined on the Trade Date)
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Final Level:
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For each Reference Index, its closing level on the Valuation Date.
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Contingent Coupon and
Memory Coupon
Feature:
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If the closing level of each Reference Index is greater than or equal to its Coupon Barrier on the applicable Observation Date, we will pay the Contingent Coupon on the
applicable Coupon Payment Date, together with any Contingent Coupons that were previously unpaid. You may not receive any Contingent Coupons during the term of the Notes.
If a Contingent Coupon is not payable on any Coupon Payment Date, it will be paid on any later Coupon Payment Date (or at maturity) on which the Contingent Coupon is then payable, together with the payment otherwise
due on that later date.
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Payment at Maturity (if
held to maturity): |
We will pay you at maturity, in addition to any Contingent Coupons due on the Maturity Date, an amount based on the Final Level of the Lesser Performing Reference Index:
For each $1,000 in principal amount, $1,000, unless the Final Level of the Lesser Performing Reference Index is less than its Trigger Level.
If the Final Level of the Lesser Performing Reference Index is less than its Trigger Level, then the investor will receive at maturity, for each $1,000 in principal amount, a cash payment equal to:
$1,000 + ($1,000 x Underlying Return of the Lesser Performing Reference Index)
Investors could lose some or all of the principal amount if the Final Level of the Lesser Performing Reference Index is less than its Trigger Level.
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Lesser Performing
Reference Index:
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The Reference Index with the lower Underlying Return.
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Observation Dates:
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Monthly, as set forth below.
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CUSIP:
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78016HUB4
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Per Note
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Total
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Price to public(1)
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100.00%
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$
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Underwriting discounts and commissions(1)
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0.40%
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$
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Proceeds to Royal Bank of Canada
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99.60%
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$
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Contingent Coupon Barrier Notes with Memory
Coupon Linked to the Lesser Performing of
Two Equity Indices
Royal Bank of Canada
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General:
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This terms supplement relates to an offering of Contingent Coupon Barrier Notes with Memory Coupon (the “Notes”) linked to the lesser performing of two
equity indices (the “Reference Indices”).
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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 3, 2023
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Issue Date:
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March 8, 2023
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Valuation Date:
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March 3, 2025
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Maturity Date:
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March 6, 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 level of each Reference Index 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, together with any Contingent Coupons that were previously unpaid.
• If the closing level of either of the Reference Indices 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 monthly 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 again on any subsequent Coupon Payment Date.
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Contingent Coupon
Rate:
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At least 9.15% per annum (at least $7.625 per month) (to be determined on the Trade Date).
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Observation Dates and
Coupon Payment
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The Observation Dates and Coupon Payment Dates will occur monthly, as set forth below:
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Dates:
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Observation Dates:
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Coupon Payment Dates:
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April 3, 2023
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April 6, 2023
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May 3, 2023
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May 8, 2023
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June 5, 2023
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June 8, 2023
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July 3, 2023
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July 7, 2023
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August 3, 2023
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August 8, 2023
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September 5, 2023
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September 8, 2023
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October 3, 2023
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October 6, 2023
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November 3, 2023
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November 8, 2023
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December 4, 2023
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December 7, 2023
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January 3, 2024
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January 8, 2024
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February 5, 2024
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February 8, 2024
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March 4, 2024
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March 7, 2024
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April 3, 2024
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April 8, 2024
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May 3, 2024
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May 8, 2024
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June 3, 2024
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June 6, 2024
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July 3, 2024
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July 9, 2024
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August 5, 2024
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August 8, 2024
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September 3, 2024
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September 6, 2024
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October 3, 2024
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October 8, 2024
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Contingent Coupon Barrier Notes with Memory
Coupon Linked to the Lesser Performing of
Two Equity Indices
Royal Bank of Canada
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November 4, 2024
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November 7, 2024
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December 3, 2024
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December 6, 2024
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January 3, 2025
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January 8, 2025
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February 3, 2025
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February 6, 2025
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March 3, 2025
(Valuation Date)
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March 6, 2025 (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 will be payable to the person to whom the payment at maturity, as the case may be, will be payable.
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Initial Level:
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For each Reference Index, its closing level on the Trade Date.
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Final Level:
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For each Reference Index, its closing level on the Valuation Date.
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Coupon Barrier and
Trigger Level:
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For each Reference Index, 75% of its Initial Level.
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Payment at Maturity:
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We will pay you at maturity, in addition to any Contingent Coupons that are payable, an amount based on the Final Level of the Lesser Performing Reference Index:
• If the Final Level of the Lesser Performing Reference Index is greater than or equal to its Trigger Level, we will pay you a cash payment equal to the principal amount.
• If the Final Level of the Lesser Performing Reference Index is less than its Trigger Level, you will receive at maturity, for each $1,000 in principal amount, a cash payment equal to:
$1,000 + ($1,000 x Underlying Return of the Lesser Performing Reference Index)
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 Lesser
Performing Reference Index from the Trade Date to the Valuation Date. Investors in the Notes could lose some or all of the principal amount if the Final Level of the Lesser Performing Reference Index is less
than its Trigger Level.
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Underlying Return:
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With respect to each Reference Index:
Final Level - Initial Level
Initial Level
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Lesser Performing
Reference Index:
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The Reference Index with the lower Underlying Return.
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Call Prior to Maturity:
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The Notes are not subject to a call at our option, or an automatic call based upon the levels of the Reference Indices.
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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 either of the Reference Indices will result in the postponement of an Observation
Date or the Valuation Date as to that Reference Index, as described in the product prospectus supplement, but not to any non-affected Reference Index.
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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 Note as a pre-paid cash-settled contingent income-bearing derivative contract linked to the Reference Indices 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 under “Supplemental Discussion of U.S. Federal Income Tax Consequences,” which apply to the Notes.
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Contingent Coupon Barrier Notes with Memory
Coupon Linked to the Lesser Performing of
Two Equity Indices
Royal Bank of Canada
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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).
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Terms Incorporated in
the Master Note:
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All of the terms on the cover page and the terms appearing 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, as modified by this terms supplement.
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Contingent Coupon Barrier Notes with Memory
Coupon Linked to the Lesser Performing of
Two Equity Indices
Royal Bank of Canada
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Contingent Coupon Barrier Notes with Memory
Coupon Linked to the Lesser Performing of
Two Equity Indices
Royal Bank of Canada
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Hypothetical Initial Level (for each Reference Index):
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100.00*
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Hypothetical Trigger Level and Coupon Barrier (for each Reference Index):
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75% of each hypothetical Initial Level
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Hypothetical Contingent Coupon Rate:
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9.15% per annum (or 0.7625% per month), which is the lowest possible Contingent Coupon Rate.
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Hypothetical Contingent Coupon Amount:
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$7.625 per month
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Observation Dates:
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Monthly
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Principal Amount:
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$1,000 per Note
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Hypothetical Final Level of the Lesser
Performing Reference Index
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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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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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75.00
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100.00%*
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$1,000.00*
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74.99
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74.99%
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$749.90
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70.00
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70.00%
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$700.00
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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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Contingent Coupon Barrier Notes with Memory
Coupon Linked to the Lesser Performing of
Two Equity Indices
Royal Bank of Canada
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Contingent Coupon Barrier Notes with Memory
Coupon Linked to the Lesser Performing of
Two Equity Indices
Royal Bank of Canada
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• |
You May Receive Less than 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 level of the Lesser Performing Reference Index between the Trade Date and the Valuation Date. If the Final Level of the Lesser Performing Reference Index is less than its Trigger Level, 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 level of the Lesser Performing Reference Index 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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You May Not Receive Any Contingent Coupons — We will not necessarily make any coupon payments on the Notes. If the closing level of either of the Reference Indices 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 level of either of the Reference Indices 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 Level of the Lesser Performing Reference Index will be less
than its Trigger Level.
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The Notes Are Linked to the Lesser Performing Reference Index, Even if the Other Reference Index Performs Better — Your return on the Notes will be linked to the lesser
performing of the Reference Indices. Even if the Final Level of the other Reference Index has increased compared to its Initial Level, or has experienced a decrease that is less than that of the Lesser Performing Reference Index, your return
will only be determined by reference to the performance of the Lesser Performing Reference Index, regardless of the performance of the other Reference Index.
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Your Payment on the Notes Will Be Determined by Reference to Each Reference Index Individually, Not to a Basket, and the Payment at Maturity Will Be Based on the Performance of the
Lesser Performing Reference Index — The Payment at Maturity will be determined only by reference to the performance of the Lesser Performing Reference Index, regardless of the performance of the other Reference Index. 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 component, as scaled by the weighting of that basket
component. However, in the case of the Notes, the individual performance of each of the Reference Indices would not be combined, and the depreciation of one Reference Index would not be mitigated by any appreciation of the other Reference
Index. Instead, your return will depend solely on the Final Level of the Lesser Performing Reference Index.
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Your Return 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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Owning the Notes Is Not the Same as Owning the Securities Represented by the Reference Indices — The return on your Notes is unlikely to reflect the return you would realize
if you actually owned the securities represented by the Reference Indices. For instance, you will not receive or be entitled to receive any dividend payments or other distributions on those securities during the term of your Notes. As an
owner of the Notes, you
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Contingent Coupon Barrier Notes with Memory
Coupon Linked to the Lesser Performing of
Two Equity Indices
Royal Bank of Canada
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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 levels of the Reference Indices increase after the Trade Date. No assurance can be given as to what our financial condition will be at any time during the term of the Notes.
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There May Not Be an Active Trading Market for the Notes-Sales in the Secondary Market May Result in Significant Losses — There may be little or no secondary market for the
Notes. The Notes will not be listed on any securities exchange. RBCCM and our other affiliates may make a market for the Notes; however, they are not required to do so. RBCCM or any of our other affiliates may stop any market-making
activities at any time. Even if a secondary market for the Notes develops, it may not provide significant liquidity or trade at prices advantageous to you. We expect that transaction costs in any secondary market would be high. As a result,
the difference between bid and asked prices for your Notes in any secondary market could be substantial.
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• |
The Initial Estimated Value of the Notes Will Be Less than the Price to the Public — The initial estimated value that will be set
forth in the final pricing supplement relating to 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 levels of the Reference Indices, 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 Indices 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
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Contingent Coupon Barrier Notes with Memory
Coupon Linked to the Lesser Performing of
Two Equity Indices
Royal Bank of Canada
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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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• |
An Investment in the Notes Is Subject to Risks Relating to Non-U.S. Securities Markets – Because foreign companies or foreign equity securities included in the SX5E are
publicly traded in the applicable foreign countries and are denominated in euros, an investment in the Notes involves particular risks. For example, the non-U.S. securities markets may be more volatile than the U.S. securities markets, and
market developments may affect these markets differently from the U.S. or other securities markets. Direct or indirect government intervention to stabilize the securities markets outside the U.S., as well as cross-shareholdings in certain
companies, may affect trading prices and trading volumes in those markets. Also, the public availability of information concerning the foreign issuers may vary depending on their home jurisdiction and the reporting requirements imposed by
their respective regulators. In addition, the foreign issuers may be subject to accounting, auditing and financial reporting standards and requirements that differ from those applicable to U.S. reporting companies.
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Contingent Coupon Barrier Notes with Memory
Coupon Linked to the Lesser Performing of
Two Equity Indices
Royal Bank of Canada
|
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Contingent Coupon Barrier Notes with Memory
Coupon Linked to the Lesser Performing of
Two Equity Indices
Royal Bank of Canada
|
SX5E =
|
Free float market capitalization of the SX5E
|
|
Divisor
|
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Contingent Coupon Barrier Notes with Memory
Coupon Linked to the Lesser Performing of
Two Equity Indices
Royal Bank of Canada
|
• |
sponsor, endorse, sell, or promote the Notes;
|
• |
recommend that any person invest in the Notes offered hereby or any other securities;
|
• |
have any responsibility or liability for or make any decisions about the timing, amount, or pricing of the Notes;
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• |
have any responsibility or liability for the administration, management, or marketing of the Notes; or
|
• |
consider the needs of the Notes or the holders of the Notes in determining, composing, or calculating the SX5E, or have any obligation to do so.
|
• |
STOXX does not make any warranty, express or implied, and disclaims any and all warranty concerning:
|
• |
the results to be obtained by the Notes, the holders of the Notes or any other person in connection with the use of the SX5E and the data included in the SX5E;
|
• |
the accuracy or completeness of the SX5E and its data;
|
• |
the merchantability and the fitness for a particular purpose or use of the SX5E and its data;
|
• |
STOXX will have no liability for any errors, omissions, or interruptions in the SX5E or its data; and
|
• |
Under no circumstances will STOXX be liable for any lost profits or indirect, punitive, special, or consequential damages or losses, even if STOXX knows that they might occur.
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|
|
Contingent Coupon Barrier Notes with Memory
Coupon Linked to the Lesser Performing of
Two Equity Indices
Royal Bank of Canada
|
|
|
Contingent Coupon Barrier Notes with Memory
Coupon Linked to the Lesser Performing of
Two Equity Indices
Royal Bank of Canada
|
|
|
Contingent Coupon Barrier Notes with Memory
Coupon Linked to the Lesser Performing of
Two Equity Indices
Royal Bank of Canada
|
|
|
Contingent Coupon Barrier Notes with Memory
Coupon Linked to the Lesser Performing of
Two Equity Indices
Royal Bank of Canada
|
|
|
Contingent Coupon Barrier Notes with Memory
Coupon Linked to the Lesser Performing of
Two Equity Indices
Royal Bank of Canada
|