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Preferred Share Description
Toronto-Dominion Bank (TD.PF.K) **New Issue**
4.75% Non-Cumulative, Redeemable, NVCC**, Rate-Reset, Series 20 preferred shares
Prospectus - September 6, 2018
DBRS Credit Rating: June 27, 2018 - DBRS changed the trends on all long-term ratings of The Toronto-Dominion Bank and its related entities to Positive from Stable. DBRS also confirmed all the ratings of TD, including its Long-Term Issuer Rating of AA and Short-Term Issuer Rating of R-1 (high). The short-term ratings of the Bank remain Stable. TD’s Intrinsic Assessment (IA) and Support Assessment continue to be AA (low) and SA2, respectively, reflecting the expectation of timely, systemic support from the Government of Canada (rated AAA with a Stable trend by DBRS). The SA2 designation results in one notch of uplift from the IA to the Long-Term Issuer Rating. However, following the finalization of the Canadian Bank Recapitalization Regime, DBRS eventually expects to remove the uplift from systemic support. This will be actioned once a sufficient level of bail-inable senior debt is issued, thereby providing an adequate buffer for non-bail-inable obligations, which is then expected to offset the removal of systemic support.
Important Note: NVCC preferred shares have a lower credit rating than other TD Bank preferred share issues. DBRS assigned the NVCC Preferred Shares Series 16 a rating equal to the Bank’s intrinsic assessment less four rating notches because the Series 14 has only an Office of the Superintendent of Financial Institutions (OSFI)-compliant non-viable contingent capital (NVCC) trigger, which is consistent with the OSFI requirements for NVCC instruments, and no additional triggers.
**NVCC is short for Non-Viability Contingent Capital and it refers to the issuer's ability to convert the preferred shares into common shares if a "Trigger Event" occurs. See "Convertible by Company" section below for the definition of a trigger event.
Trading Note: The shares are expected to begin trading on or about September 18, 2018.
- DBRS Rating
- Pfd-2 Stable Trend
- DBRS Rating Date
- Shares Issued
- Issued Date
- Shares O/S
- O/S Date
- $1.1875 per share per year
- Dividend Dates
- On the last day of January, April, July and October
- Dividend Details
- The initial dividend is set at 4.75% until October 31, 2023. The dividend rate will be reset on October 31, 2023 and on October 31st every five years thereafter. The annual dividend rate will be reset to equal the sum of the 5-year Government of Canada Bond Yield (GCAN5YR) plus 2.59%.
- The shares are not redeemable by the company prior to October 31, 2023. On October 31, 2023 and on October 31st every five years thereafter the company may redeem the shares at $25.00 per share, plus accrued and unpaid dividends.
- The Series 20, Rate-Reset shares are convertible, at the holder's option, into Series 21 Floating-Rate preferred shares on October 31, 2023 and on October 31st every five years thereafter. The Floating Rate preferred share will calculate and pay a quarterly dividend equal to the sum of the Government of Canada 3-month Treasury Bill Rate plus 2.59%. In addition, on October 31, 2028 and on October 31st every five years thereafter, holders of the Series 21 Floating Rate shares will have the right to convert all or a portion of their shares into an equal number of Series 20 Rate-Reset preferred shares.
- Lead Underwriter(s)
- TD Securities Inc.
- Transfer Agent
- CST Trust Company
- CST Trust Company
- Dividend Reinvestment Plan
- Not available to preferred shareholders
- Convertible by Company
- Contingent Conversion: If a "Trigger Event" (as defined below) were to occur, all of the then outstanding Preferred Shares Series 20 and 21 will be automatically exchanged, without the consent of the holders, for newly issued fully-paid and freely-tradable common shares of the Bank, the number of which to be determined in accordance with the Contingent Conversion Formula; rounding down, if necessary, to the nearest whole number of Common Shares, such conversion being referred to herein as the “Contingent Conversion”. Fractions of Common Shares will not be issued or delivered pursuant to a Contingent Conversion and no cash payment will be made in lieu thereof. A Trigger Event means any one of the following: 1) the Superintendent publicly announces that the Bank has been advised, in writing, that the Superintendent is of the opinion that the Bank has ceased, or is about to cease, to be viable and that, after the conversion of the Preferred Shares and all other non-viability contingent capital instruments issued by the Bank and taking into account any other factors or circumstances that are considered relevant or appropriate, it is reasonably likely that the viability of the Bank will be restored or maintained; or 2) a federal or provincial government in Canada publicly announces that the Bank has accepted or agreed to accept a capital injection, or equivalent support, from the federal government or any provincial government or political subdivision or agent or agency thereof without which the Bank would have been determined by the Superintendent to be non-viable. See the share's prospectus for the exact details.
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