What are some risks associated with investing in PPNs?
PPNs provide opportunities for a variable return, but they also pose risks. Investors should carefully consider the risks involved before purchasing. A few of those possible risks include the following:
- The Notes may not be suitable investments for all investors.
- The Notes are different from conventional fixed income investments.
- Investors in PPNs do not have an ownership interest, nor any recourse to the underlying benchmark.
- All principal repayment and variable return is dependent upon the credit worthiness of the issuer.
- The PPNs typically constitute direct, unsubordinated and unsecured obligations of the issuer.
- No return may be payable in respect of the Notes.
- Variable Return will depend on the closing prices of the underlying benchmark.
- The occurrence of an Extraordinary Event could affect the return payable on the Notes.
- The occurrence of Special Circumstances may alter future payments.
- The issuer may engage in activities that could adversely impact the Notes.
- The issuer or one of its affiliates may publish reports with respect to the Notes that may express opinions inconsistent with purchasing the Notes.
- Changes in economic conditions may adversely affect the business and prospects of the PPN’s underlying benchmark.
- A secondary market for the Notes may not be developed or be sustainable.
- The performance of the Notes may not track the underlying benchmark.
- The issuer may have economic interests that are adverse to those of investors.
- The Canada Revenue Agency’s (CRA) position with respect to the taxation of the Notes could change prior to the PPNs maturity.
Investment considerations of PPNs