Subject to Completion
Preliminary Term Sheet
dated May 31, 2024
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Filed Pursuant to Rule 433
Registration Statement No. 333-262557
(To Prospectus dated March 4, 2022 and
Product Supplement STEPS-1 dated July 15, 2022)
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Units
$10 principal amount per unit CUSIP No. ![]() |
Pricing Date*
Settlement Date*
Maturity Date*
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June , 2024
July , 2024
July , 2025
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*Subject to change based on the actual date the notes are priced for initial sale to the public (the “pricing date”)
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STEP Income Securities® Linked to the Common Stock of United Parcel Service, Inc.
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Maturity of approximately one year and one week
• Interest payable quarterly at the rate of 10.00% per year
• A payment of [$0.10 to $0.50] per unit if the Underlying Stock increases to or above 110.00% of the Starting Value
• 1-to-1 downside exposure to decreases in the Underlying Stock, with up to 100.00% of your principal at risk
• All payments on the notes subject to the credit risk of The Toronto-Dominion Bank
• In addition to the underwriting discount set forth below, the notes include a hedging-related charge of $0.05 per unit. See “Structuring the Notes”
• Limited secondary market liquidity, with no exchange listing
• The notes are unsecured debt securities and are not savings accounts or insured deposits of TD. The notes are not insured or guaranteed by the Canada
Deposit Insurance Corporation (the “CDIC”), the U.S. Federal Deposit Insurance Corporation (the “FDIC”) or any other governmental agency of Canada, the United States or any other jurisdiction
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Per Unit
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Total
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Public offering price(1)(2)
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$10.00
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$
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Underwriting discount(2)
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$0.15
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$
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Proceeds, before expenses, to TD
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$9.85
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$
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(1) |
Plus accrued interest from the scheduled settlement date, if settlement occurs after that date.
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(2) |
For any purchase of 300,000 units or more in a single transaction by an individual investor or in combined transactions with the investor's household in this offering, the public offering price and the
underwriting discount will be $9.95 per unit and $0.10 per unit, respectively. See “Supplement to the Plan of Distribution (Conflicts of Interest)” below.
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Are Not FDIC Insured
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Are Not Bank Guaranteed
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May Lose Value
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STEP Income Securities®
Linked to the Common Stock of United Parcel Service, Inc. due July , 2025
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Terms of the Notes
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Issuer:
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The Toronto-Dominion Bank (“TD”)
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Principal
Amount:
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$10.00 per unit
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Term:
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Approximately one year and one week
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Underlying
Stock:
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The Common stock of United Parcel Service, Inc., (the “Underlying Company”) (Bloomberg symbol: UPS)
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Starting Value:
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The Volume Weighted Average Price on the pricing date.
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Volume
Weighted
Average Price:
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Absent a determination of a manifest error or a Market Disruption Event, the volume weighted average price (rounded to two decimal places)
shown on page “AQR” on Bloomberg L.P. for trading in the Underlying Stock taking place from approximately 9:30 a.m. to 4:02 p.m. on all U.S. exchanges.
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Ending Value:
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The Closing Market Price of the Underlying Stock on the valuation date, multiplied by the Price Multiplier. The valuation date is subject
to postponement in the event of Market Disruption Events, as described beginning on page PS-22 of product supplement STEPS-1.
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Valuation Date:
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Approximately the fifth scheduled trading day immediately prior to the maturity date.
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Interest Rate:
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10.00% per year, payable quarterly
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Interest Payment
Dates:
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October , 2024, January , 2025, April , 2025 and July , 2025
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Step Payment:
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[$0.10 to $0.50] per unit, which represents a return of [1.00% to 5.00%] of the principal amount. The actual Step Payment will be
determined on the pricing date.
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Step Level:
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110.00% of the Starting Value, rounded to two decimal places.
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Threshold Value:
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100.00% of the Starting Value.
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Price Multiplier:
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1, subject to adjustment for certain corporate events relating to the Underlying Stock described beginning on page PS-24 of product
supplement STEPS-1.
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Fees and
Charges:
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The underwriting discount of $0.15 per unit listed on the cover page and the hedging related charge of $0.05 per unit described in
“Structuring the Notes” on page TS-10.
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Calculation
Agents:
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BofA Securities, Inc. (“BofAS”) and TD, acting jointly.
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Redemption Amount Determination
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In addition to interest payable, on the maturity date, you will receive a cash payment per unit determined as follows:
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STEP Income Securities®
Linked to the Common Stock of United Parcel Service, Inc. due July , 2025
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Product supplement STEPS-1 dated July 15, 2022:
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Prospectus dated March 4, 2022:
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You anticipate that the Ending Value will be greater than or equal to the Starting Value.
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You seek interest payments on your investment.
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You accept that the maximum return on the notes is limited to the sum of the quarterly interest payments and the Step Payment, if any.
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You accept that your investment may result in a loss, which could be significant, if the Ending Value is below the Threshold Value.
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You are willing to forgo dividends or other benefits of owning the Underlying Stock.
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You are willing to accept that a limited market or no market exists for sales of the notes prior to maturity, and understand that the market price for the notes in any secondary market may be adversely affected by various
factors, including, but not limited to, our actual and perceived creditworthiness, our internal funding rate and fees and charges on the notes, as described on page TS-2.
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You are willing to assume our credit risk, as issuer of the notes, for all payments under the notes, including the Redemption Amount.
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You anticipate that the Ending Value will be less than the Starting Value.
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You anticipate that the price of the Underlying Stock will increase substantially and do not want a payment at maturity that is limited to the Step Payment.
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You seek principal repayment or preservation of capital.
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In addition to interest payments, you seek an additional guaranteed return above the principal amount.
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You seek to receive dividends or other distributions paid on the Underlying Stock.
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You seek an investment for which there will be a liquid secondary market.
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You are unwilling or are unable to take market risk on the notes or to accept the credit risk of TD as issuer of the notes.
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STEP Income Securities®
Linked to the Common Stock of United Parcel Service, Inc. due July , 2025
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1) |
a Starting Value of $100.00;
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2) |
a Threshold Value of $100.00;
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3) |
a Step Level of $110.00;
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4) |
a Step Payment of $0.30 per unit (the midpoint of the Step Payment range of [$0.10 to $0.50] per unit);
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5) |
an expected term of the notes of approximately one year and one week; and
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6) |
the Interest Rate of 10.00% per year.
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STEP Income Securities®
Linked to the Common Stock of United Parcel Service, Inc. due July , 2025
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Example 1
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Example 2
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Example 3
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The Ending Value is
greater than or equal to
the Step Level
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The Ending Value is
less than the Step
Level but greater than
or equal to the Starting
Value
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The Ending Value is
less than the Starting
Value and the
Threshold Value
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Starting Value
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$100.00
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$100.00
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$100.00
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Ending Value
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$125.00
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$105.00
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$70.00
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Step Level
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$110.00
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$110.00
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$110.00
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Threshold Value
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$100.00
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$100.00
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$100.00
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Interest Rate (per year)
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10.00%
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10.00%
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10.00%
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Step Payment
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$0.30
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$0.00
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$0.00
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Redemption Amount per Unit
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$10.30
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$10.00
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$7.00
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Total Return of the Underlying Stock(1)
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29.86%
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9.86%
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-25.14%
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Total Return on the Notes(2)
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13.17%
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10.17%
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-19.83%
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(1) |
The total return of the Underlying Stock may be rounded for ease of analysis and assumes:
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(a) |
the percentage change in the price of the Underlying Stock from the Starting Value to the Ending Value;
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(b) |
a constant dividend yield of 4.78% per year; and
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(c) |
no transaction fees or expenses.
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(2) |
The total return on the notes may be rounded for ease of analysis, includes interest paid on the notes and assumes an expected term of the notes of approximately one year and one week.
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STEP Income Securities®
Linked to the Common Stock of United Parcel Service, Inc. due July , 2025
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Depending on the performance of the Underlying Stock as measured shortly before the maturity date, your investment may result in a loss; there is no guaranteed return of principal.
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You will not receive a Step Payment at maturity unless the Ending Value is greater than or equal to the Step Level.
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Your return on the notes may be less than the yield you could earn by owning a conventional fixed or floating rate debt security of comparable maturity.
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Your investment return is limited to the return represented by the periodic interest payments over the term of the notes and the Step Payment, if any, and may be less than a comparable investment directly in the Underlying Stock.
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The Underlying Company will have no obligations relating to the notes, and neither we nor MLPF&S will perform any due diligence procedures with respect to the Underlying Company in connection with this offering.
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You will have no rights that a security holder of the Underlying Stock would have, you will have no rights to receive any shares of the Underlying Stock, and you will not be entitled to dividends or other distributions by the
Underlying Company.
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While we, MLPF&S, BofAS or our or their respective affiliates may from time to time own securities of the Underlying Company, none of us, MLPF&S, BofAS or our or their respective affiliates control the Underlying Company,
and have not verified any disclosure made by the Underlying Company.
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The Redemption Amount will not be adjusted for all corporate events that could affect the Underlying Stock. See “Description of the Notes—Anti-Dilution Adjustments” beginning on page PS-23 of product supplement STEPS-1.
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The initial estimated value of your notes on the pricing date will be less than their public offering price. The difference between the public offering price of your notes and the initial estimated value of the notes reflects costs
and expected profits associated with selling and structuring the notes, as well as hedging our obligations under the notes (including, but not limited to, the hedging related charge, as further described under “Structuring the Notes”
on page TS-10). Because hedging our obligations entails risks and may be influenced by market forces beyond our control, this hedging may result in a profit that is more or less than expected, or a loss and the amount of any such
profit or loss will not be known until the maturity date.
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The initial estimated value of your notes is based on our internal funding rate. The internal funding rate used in the determination of the initial estimated value of the notes generally represents a discount from the credit
spreads for our conventional fixed-rate debt securities and the borrowing rate we would pay for our conventional fixed-rate debt securities. This discount is based on, among other things, our view of the funding value of the notes as
well as the higher issuance, operational and ongoing liability management costs of the notes in comparison to those costs for our conventional fixed-rate debt, as well as estimated financing costs of any hedge positions (including,
but not limited to, the hedging related charge, as further described under “Structuring the Notes” on page TS-10), taking into account regulatory and internal requirements. If the interest rate implied by the credit spreads for our
conventional fixed-rate debt securities, or the borrowing rate we would pay for our conventional fixed-rate debt securities were to be used, we would expect the economic terms of the notes to be more favorable to you. Additionally,
assuming all other economic terms are held constant, the use of an internal funding rate for the notes is expected to increase the initial estimated value of the notes and have an adverse effect on the economic terms of the notes.
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The initial estimated value of the notes is based on our internal pricing models, which may prove to be inaccurate and may be different from the pricing models of other financial institutions, including BofAS and MLPF&S. The
initial estimated value of your notes when the terms of the notes are set on the pricing date is based on our internal pricing models, which take into account a number of variables, typically including the expected volatility of the
Market Measure, interest rates (forecasted, current and historical rates), price-sensitivity analysis, time to maturity of the notes and our internal funding rate, and are based on a number of subjective assumptions, which are not
evaluated or verified on an independent basis and may or may not materialize. Further, our pricing models may be different from other financial institutions’ pricing models, including those of BofAS and MLPF&S, and the
methodologies used by us to estimate the value of the notes may not be consistent with those of other financial institutions that may be purchasers or sellers of notes in any secondary market. As a result, the secondary market price
of your notes, if any, may be materially less than the initial estimated value of the notes determined by reference to our internal pricing models. In addition, market conditions and other relevant factors in the future may change and
any assumptions may prove to be incorrect.
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STEP Income Securities®
Linked to the Common Stock of United Parcel Service, Inc. due July , 2025
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The initial estimated value of your notes is not a prediction of the prices at which you may sell your notes in the secondary market, if any exists, and such secondary market prices, if any, will likely be less than the public
offering price of your notes, may be less than the initial estimated value of your notes and could result in a substantial loss to you. The initial estimated value of the notes will not be a prediction of the prices at which
MLPF&S, BofAS, their or our respective affiliates or third parties may be willing to purchase the notes from you in secondary market transactions (if they are willing to purchase, which they are not obligated to do). The price at
which you may be able to sell your notes in the secondary market at any time, if any, will be influenced by many factors that cannot be predicted, such as market conditions, and any bid and ask spread for similar sized trades, and may
be substantially less than the initial estimated value of the notes. Further, as secondary market prices of your notes take into account the levels at which our debt securities trade in the secondary market, and do not take into
account our various costs and expected profits associated with selling and structuring the notes, as well as hedging our obligations under the notes, secondary market prices of your notes will likely be less than the public offering
price of your notes. As a result, the price at which MLPF&S, BofAS, their or our respective affiliates or third parties may be willing to purchase the notes from you in secondary market transactions, if any, will likely be less
than the price you paid for your notes, and any sale prior to maturity could result in a substantial loss to you.
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A trading market is not expected to develop for the notes. None of us, any of our affiliates, MLPF&S or BofAS is obligated to make a market for, or to repurchase, the notes. There is no assurance that any party will be willing
to purchase your notes at any price in any secondary market.
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Our business, hedging and trading activities, and those of MLPF&S, BofAS and our and their respective affiliates relating to the Underlying Company or the notes and any hedging and trading activities we, MLPF&S, BofAS or
our or their respective affiliates engage in for our clients’ accounts, may affect the market value of, and return on, the notes and may create conflicts of interest with you.
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There may be potential conflicts of interest involving the calculation agents, one of which is us and one of which is BofAS, as the determinations made by the calculation agents may be discretionary and could adversely affect any
payment on the notes.
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Payments on the notes are subject to our credit risk, and actual or perceived changes in our creditworthiness are expected to affect the value of the notes. If we become unable to meet our financial obligations as they become due,
you may lose some or all of your investment.
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The U.S. federal income tax consequences of the notes are uncertain and, because of this uncertainty, there is a risk that the U.S. federal income tax consequences of the notes could differ materially and adversely from the
treatment described below in “Supplemental Discussion of U.S. Federal Income Tax Consequences”, as described further in product supplement STEPS-1 under “Material U.S. Federal Income Tax Consequences — Alternative Treatments”. You
should consult your tax advisor as to the tax consequences of an investment in the notes and the potential alternative treatments.
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For a discussion of the Canadian federal income tax consequences of investing in the notes, please see the discussion in product supplement STEPS-1 under “Supplemental Discussion of Canadian Tax Consequences” and the further
discussion herein under “Summary of Canadian Federal Income Tax Consequences”. If you are not a Non-resident Holder (as that term is defined in the prospectus) for Canadian federal income tax purposes or if you acquire the notes in
the secondary market, you should consult your tax advisors as to the consequences of acquiring, holding and disposing of the notes and receiving the payments that might be due under the notes.
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STEP Income Securities®
Linked to the Common Stock of United Parcel Service, Inc. due July , 2025
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STEP Income Securities®
Linked to the Common Stock of United Parcel Service, Inc. due July , 2025
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• |
the investor’s spouse (including a domestic partner), siblings, parents, grandparents, spouse’s parents, children and grandchildren, but excluding accounts held by aunts, uncles,
cousins, nieces, nephews or any other family relationship not directly above or below the individual investor;
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a family investment vehicle, including foundations, limited partnerships and personal holding companies, but only if the beneficial owners of the vehicle consist solely of the investor
or members of the investor’s household as described above; and
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a trust where the grantors and/or beneficiaries of the trust consist solely of the investor or members of the investor’s household as described above; provided that, purchases of the
notes by a trust generally cannot be aggregated together with any purchases made by a trustee’s personal account.
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STEP Income Securities®
Linked to the Common Stock of United Parcel Service, Inc. due July , 2025
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STEP Income Securities®
Linked to the Common Stock of United Parcel Service, Inc. due July , 2025
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STEP Income Securities®
Linked to the Common Stock of United Parcel Service, Inc. due July , 2025
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STEP Income Securities®
Linked to the Common Stock of United Parcel Service, Inc. due July , 2025
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STEP Income Securities®
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TS-13
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