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RBC Capital Markets® |
Filed Pursuant to Rule 433
Registration Statement No. 333-171806
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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 February 6, 2013
Pricing Supplement Dated February __, 2013 to the Product
Prospectus Supplement ERN-EI-1, Prospectus Supplement, and
Prospectus, Each Dated January 28, 2011
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$ __________
Bullish Barrier Enhanced Return Notes
Linked to the EURO STOXX 50® Index,
Due March 1, 2016
Royal Bank of Canada
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Royal Bank of Canada is offering the Bullish Barrier Return Notes (the “Notes”) linked to the performance of the Reference Asset named below.
The CUSIP number for the Notes is 78008SYW0. The Notes provide a [120%-130%] leveraged positive return (to be determined on the Pricing Date), if the level of the EURO STOXX 50® Index (the “Reference Asset”) increases from the Initial Level to the Final Level. The Notes do not pay interest, and investors are subject to one-for-one loss of the principal amount of the Notes if the closing level of the Reference Asset on the Valuation Date is less than 70% of the Initial Level.
Any payments on the Notes are subject to our credit risk.
Issue Date: February 28, 2013
Maturity Date: March 1, 2016
The Notes will not be listed on any U.S. securities exchange.
Investing in the Notes involves a number of risks. See “Risk Factors” beginning on page 1 of the prospectus supplement dated January 28, 2011, “Additional Risk Factors Specific to the Notes” beginning on page PS-4 of the product prospectus supplement dated January 28, 2011, and “Selected Risk Considerations” on page P-6 of this terms supplement.
The Notes will not constitute deposits insured by the Canada Deposit Insurance Corporation, the U.S. Federal Deposit Insurance Corporation (the “FDIC”) or any other Canadian or U.S. government agency or instrumentality.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined that this terms supplement is truthful or complete. Any representation to the contrary is a criminal offense.
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Per Note
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Total
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Price to public(1)
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%
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$
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Underwriting discounts and commissions
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%
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$
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Proceeds to Royal Bank of Canada
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%
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$
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(1) For Notes sold to certain fee-based advisory accounts, the price to the public will be 97.25%
The price at which you purchase the Notes includes hedging costs and profits that Royal Bank of Canada or its affiliates expect to incur or realize. These costs and profits will reduce the secondary market price, if any secondary market develops, for the Notes. As a result, you may experience an immediate and substantial decline in the market value of your Notes on the Issue Date.
If the Notes priced on the date of this terms supplement, RBC Capital Markets, LLC, which we refer to as RBCCM, acting as agent for Royal Bank of Canada, would receive a commission of approximately $30.00 per $1,000 in principal amount of the Notes and would use a portion of that commission to allow selling concessions to other dealers of up to approximately $30.00 per $1,000 in principal amount of the Notes. The other dealers may forgo, in their sole discretion, some or all of their selling concessions. If the Notes priced on the date of this terms supplement, the price of the Notes would also include a profit of approximately $7.50 per $1,000 in principal amount of the Notes earned by Royal Bank of Canada in hedging its exposure under the Notes. In no event will the total of the commission received by RBCCM, which includes concessions to be allowed to other dealers, and the hedging profits of Royal Bank of Canada, exceed $50.00 per $1,000 in principal amount of the Notes. See “Supplemental Plan of Distribution (Conflicts of Interest)” below.
We may use this terms supplement in the initial sale of the Notes. In addition, RBCCM or another of our affiliates may use this terms supplement in a market-making transaction in the Notes after their initial sale. Unless we or our agent informs the purchaser otherwise in the confirmation of sale, this terms supplement is being used in a market-making transaction.
RBC Capital Markets, LLC
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Bullish Barrier Enhanced Return Notes
Linked to the EURO STOXX 50® Index,
Due March 1, 2016
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SUMMARY
The information in this “Summary” section is qualified by the more detailed information set forth in this terms supplement, the product prospectus supplement, the prospectus supplement, and the prospectus.
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Issuer:
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Royal Bank of Canada (“Royal Bank”)
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Issue:
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Senior Global Medium-Term Notes, Series E
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Underwriter:
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RBC Capital Markets, LLC (“RBCCM”)
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Reference Asset:
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EURO STOXX 50® Index
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Bloomberg Ticker:
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SX5E
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Currency:
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U.S. Dollars
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Minimum
Investment:
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$1,000 and minimum denominations of $1,000 in excess thereof
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Pricing Date:
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February 25, 2013
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Issue Date:
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February 28, 2013
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CUSIP:
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78008SYW0
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Valuation Date:
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February 25, 2016. The closing level of the Reference Asset between the Pricing Date and the Valuation Date will not impact the amount payable on the Notes.
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Payment at Maturity
(if held to maturity):
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If, on the Valuation Date, the Percentage Change is positive, then the investor will receive an amount per $1,000 principal amount per Note equal to:
Principal Amount + (Principal Amount x Percentage Change x Leverage Factor)
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If, on the Valuation Date, the Percentage Change is less than or equal to 0%, but not by more than the Barrier Percentage (that is, the Percentage Change is between zero and -30%), then the investor will receive the principal amount only.
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If, on the Valuation Date, the level of the Reference Asset closes below 70% of the Initial Level, then the investor will receive a cash payment equal to:
Principal Amount + (Principal Amount x Percentage Change)
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Percentage Change:
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The Percentage Change, expressed as a percentage, is calculated using the following formula:
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Final Level - Initial Level
Initial Level
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Initial Level:
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The closing level of the Reference Asset on the Pricing Date.
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Final Level:
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The closing level of the Reference Asset on the Valuation Date.
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Leverage Factor:
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[120%-130%] (to be determined on the Pricing Date).
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Barrier Percentage:
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30% |
RBC Capital Markets, LLC
P-2
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Bullish Barrier Enhanced Return Notes
Linked to the EURO STOXX 50® Index,
Due March 1, 2016
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Barrier Level:
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70% of the Initial Level.
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Maturity Date:
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March 1, 2016, subject to extension for market and other disruptions, as described in the product prospectus supplement dated January 28, 2011.
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Term:
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Approximately three (3) years.
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Principal at Risk:
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The Notes are NOT principal protected. You may lose all or a substantial portion of your principal amount at maturity if the closing level of the Reference Asset on the Valuation Date is less than 70% of the Initial Level.
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Calculation Agent:
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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 derivative contract 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 discussion in this terms supplement under “Supplemental Discussion of U.S. Federal Income Tax Consequences” and the discussion (including the opinion of our counsel Morrison & Foerster LLP) in the product prospectus supplement dated January 28, 2011 under “Supplemental Discussion of U.S. Federal Income Tax Consequences,” which applies to the Notes.
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Secondary Market:
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RBCCM (or one of its affiliates), though not obligated to do so, plans to 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 of your Notes.
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Listing:
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The Notes will not be listed on any securities exchange.
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Clearance and
Settlement:
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DTC global (including through its indirect participants Euroclear and Clearstream, Luxembourg as described under “Description of Debt Securities—Ownership and Book-Entry Issuance” in the prospectus dated January 28, 2011).
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Terms Incorporated
in the Master Note:
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All of 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 dated January 28, 2011, as modified by this terms supplement.
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RBC Capital Markets, LLC
P-3
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Bullish Barrier Enhanced Return Notes
Linked to the EURO STOXX 50® Index,
Due March 1, 2016
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ADDITIONAL TERMS OF YOUR NOTES
You should read this terms supplement together with the prospectus dated January 28, 2011, as supplemented by the prospectus supplement dated January 28, 2011 and the product prospectus supplement dated January 28, 2011, relating to our Senior Global Medium-Term Notes, Series E, of which these Notes are a part. Capitalized terms used but not defined in this terms supplement will have the meanings given to them in the product prospectus supplement. In the event of any conflict, this terms supplement will control. The Notes vary from the terms described in the product prospectus supplement in several important ways. You should read this terms supplement carefully.
This terms supplement, together with the documents listed below, contains the terms of the Notes and supersedes all prior or contemporaneous oral statements as well as any other written materials including preliminary or indicative pricing terms, correspondence, trade ideas, structures for implementation, sample structures, brochures or other educational materials of ours. You should carefully consider, among other things, the matters set forth in “Risk Factors” in the prospectus supplement dated January 28, 2011 and “Additional Risk Factors Specific to the Notes” in the product prospectus supplement dated January 28, 2011, as the Notes involve risks not associated with conventional debt securities. We urge you to consult your investment, legal, tax, accounting and other advisors before you invest in the Notes. You may access these documents on the Securities and Exchange Commission (the “SEC”) website at www.sec.gov as follows (or if that address has changed, by reviewing our filings for the relevant date on the SEC website):
Prospectus dated January 28, 2011:
Prospectus Supplement dated January 28, 2011:
Product Prospectus Supplement ERN-EI-1 dated January 28, 2011:
Our Central Index Key, or CIK, on the SEC website is 1000275. As used in this terms supplement, the “Company,” “we,” “us,” or “our” refers to Royal Bank of Canada.
Royal Bank of Canada has filed a registration statement (including a product prospectus supplement, a prospectus supplement, and a prospectus) with the SEC for the offering to which this terms supplement relates. Before you invest, you should read those documents and the other documents relating to this offering that we have filed with the SEC for more complete information about us and this offering. You may obtain these documents without cost by visiting EDGAR on the SEC Website at www.sec.gov. Alternatively, Royal Bank of Canada, any agent or any dealer participating in this offering will arrange to send you the product prospectus supplement, the prospectus supplement and the prospectus if you so request by calling toll-free at 1-866-609-6009.
RBC Capital Markets, LLC
P-4
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Bullish Barrier Enhanced Return Notes
Linked to the EURO STOXX 50® Index,
Due March 1, 2016
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HYPOTHETICAL RETURNS
The examples set out below are included for illustration purposes only. The hypothetical Percentage Changes of the Reference Asset used to illustrate the calculation of the Payment at Maturity (rounded to two decimal places) are not estimates or forecasts of the Initial Level, the Final Level or the level of the Reference Asset on the Valuation Date. All examples assume that a holder purchased Notes with an aggregate principal amount of $1,000, a Barrier Level of 70% of the Initial Level, a Leverage Factor of 125% (the midpoint of the Leverage Factor range of 120% to 130%), and that no market disruption event occurs on the Valuation Date.
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Example 1—
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Calculation of the Payment at Maturity where the Percentage Change is positive.
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Percentage Change:
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5%
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Payment at Maturity:
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$1,000 + ($1,000 x 5% x 125%) = $1,000 + $62.50 = $1,062.50
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On a $1,000 investment, a 5% Percentage Change results in a Payment at Maturity of $1,062.50, a 6.25% return on the Notes.
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Example 2—
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Calculation of the Payment at Maturity where the Percentage Change is negative (but not by more than the Barrier Level).
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Percentage Change:
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-10%
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In this case, even though the Percentage Change is negative, you will receive the principal amount of your Notes at maturity, because the closing level of the Reference Asset on the Valuation Date is greater than 70% of the Initial Level.
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In this case, on a $1,000 investment, a -10% Percentage Change results in a Payment at Maturity of $1,000, a 0% return on the Notes.
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Example 3—
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Calculation of the Payment at Maturity where the Percentage Change is negative (by more than the Barrier Level).
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Percentage Change:
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-40%
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Payment at Maturity:
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$1,000 + ($1,000 x -40%) = $1,000 - $400 = $600
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In this case, on a $1,000 investment, a -40% Percentage Change results in a Payment at Maturity of $600, a -40% return on the Notes.
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RBC Capital Markets, LLC
P-5
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Bullish Barrier Enhanced Return Notes
Linked to the EURO STOXX 50® Index,
Due March 1, 2016
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SELECTED RISK CONSIDERATIONS
An investment in the Notes involves significant risks. Investing in the Notes is not equivalent to investing directly in the Reference Asset. These risks are explained in more detail in the section “Additional Risk Factors Specific to the Notes,” beginning on page PS-4 of the product prospectus supplement. In addition to the risks described in the prospectus supplement and the product prospectus supplement, you should consider the following:
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Principal at Risk – Investors in the Notes could lose a substantial portion of their principal amount if there is a decline in the level of the Reference Asset. You will lose one percent of the principal amount of your Notes for each 1% that the Final Level is less than the Barrier Level in an amount proportionate to the decline in the level of the Reference Asset.
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The Notes Do Not Pay Interest and Your Return May Be Lower than the Return on a Conventional Debt Security of Comparable Maturity – There will be no periodic interest payments on the Notes as there would be on a conventional fixed-rate or floating-rate debt security having the same 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 bought a conventional senior interest bearing debt security of Royal Bank.
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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 Royal Bank’s senior unsecured debt securities. As a result, your receipt of the amount due on the maturity date is dependent upon Royal Bank’s ability to repay its obligations at that time. This will be the case even if the level of the Reference Asset increases after the pricing date. No assurance can be given as to what our financial condition will be at the maturity 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 other affiliates of Royal Bank may make a market for the Notes; however, they are not required to do so. RBCCM or any other affiliate of Royal Bank 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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You Will Not Have Any Rights to the Securities Included in the Reference Asset – As a holder of the Notes, you will not have voting rights or rights to receive cash dividends or other distributions or other rights that holders of securities included in the Reference Asset would have.
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The Inclusion in the Purchase Price of the Notes of a Selling Concession and of Royal Bank’s Cost of Hedging its Market Risk under the Notes Will Adversely Affect the Value of the Notes Prior to Maturity – The price at which you purchase of the Notes includes a selling concession (including a broker’s commission), as well as the costs that Royal Bank (or one of its affiliates) expects to incur in the hedging of its market risk under the Notes. Such hedging costs include the expected cost of undertaking this hedge, as well as the profit that Royal Bank (or its affiliates) expects to realize in consideration for assuming the risks inherent in providing such hedge. As a result, 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. 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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RBC Capital Markets, LLC
P-6
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Bullish Barrier Enhanced Return Notes
Linked to the EURO STOXX 50® Index,
Due March 1, 2016
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·
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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 Reference Asset are publicly traded in the applicable foreign countries and are denominated in currencies other than U.S. dollars, 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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The securities included in the Reference Asset are issued by companies located within the Eurozone, which is and has been undergoing severe financial stress, and the political, legal and regulatory ramifications are impossible to predict. Changes within the Eurozone could have a material adverse effect on the performance of the Reference Asset and, consequently, on the value of the Notes.
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Market Disruption Events and Adjustments – The payment at maturity 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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RBC Capital Markets, LLC
P-7
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Bullish Barrier Enhanced Return Notes
Linked to the EURO STOXX 50® Index,
Due March 1, 2016
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INFORMATION REGARDING THE REFERENCE ASSET
All disclosures contained in this terms supplement regarding the Reference Asset, including, without limitation, its make up, method of calculation, and changes in its components, have been derived from publicly available sources. The information reflects the policies of, and is subject to change by, STOXX Limited, as the sponsor of the Reference Asset (“STOXX”). STOXX, which owns the copyright and all other rights to the Reference Asset, has no obligation to continue to publish, and may discontinue publication of, the Reference Asset. The consequences of STOXX discontinuing publication of the Reference Asset are discussed in the section of the product prospectus supplement entitled “General Terms of the Notes—Unavailability of the Level of the Reference Asset on a Valuation Date.” Neither we nor RBCCM accepts any responsibility for the calculation, maintenance or publication of the Reference Asset or any successor index.
The Index was created by STOXX, as a joint venture between Deutsche Börse AG and SIX Group AG. Publication of the Reference Asset began in February 1998, based on an initial Index level of 1,000 at December 31, 1991.
Composition and Maintenance
The Reference Asset is composed of 50 component stocks of market sector leaders from within the 19 EURO STOXX® Supersector indices, which represent the Eurozone portion of the STOXX Europe 600® Supersector indices. Set forth below are the country weightings and market sector weightings of the securities included in the Reference Asset as of December 31, 2012:
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Country Weightings
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France
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35.3%
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Belgium
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3.1%
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Germany
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32.2%
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Ireland
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0.8%
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Spain
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12.4%
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Luxembourg
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0.7%
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Italy
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8.0%
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Finland
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0.7%
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Netherlands
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7.2%
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Sector Weightings
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Banks
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15.0%
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Technology
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5.4%
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Chemicals
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9.8 %
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Telecommunications
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5.2%
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Oil & Gas
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9.4%
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Personal & Household Goods
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3.9%
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Insurance
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9.0%
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Construction & Materials
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2.8%
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Food & Beverage
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7.9%
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Retail
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2.2%
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Industrial Goods & Services
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7.5 %
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Media
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1.4%
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Utilities
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6.7%
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Real Estate
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1.1%
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Health Care
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6.5%
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Basic Resources
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0.8%
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Automobiles & Parts
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5.6%
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RBC Capital Markets, LLC
P-8
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Bullish Barrier Enhanced Return Notes
Linked to the EURO STOXX 50® Index,
Due March 1, 2016
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The composition of the Reference Asset is reviewed annually, based on the closing stock data on the last trading day in August. The component stocks are announced on the first trading day in September. Changes to the component stocks are implemented on the third Friday in September and are effective the following trading day. Changes in the composition of the Reference Asset are made to ensure that the Reference Asset includes the 50 market sector leaders from within the Reference Asset.
The free float factors for each component stock used to calculate the Reference Asset, as described below, are reviewed, calculated, and implemented on a quarterly basis and are fixed until the next quarterly review.
The Reference Asset is also reviewed on an ongoing basis. Corporate actions (including initial public offerings, mergers and takeovers, spin-offs, delistings, and bankruptcy) that affect the Reference Asset composition are immediately reviewed. Any changes are announced, implemented, and effective in line with the type of corporate action and the magnitude of the effect.
Calculation of the Reference Asset
The Reference Asset is calculated with the “Laspeyres formula,” which measures the aggregate price changes in the component stocks against a fixed base quantity weight. The formula for calculating the Reference Asset value can be expressed as follows:
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Reference Asset =
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Free float market capitalization of the Reference Asset
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x 1,000
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Adjusted base date market capitalization of the Reference Asset
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The “free float market capitalization of the Reference Asset” is equal to the sum of the products of the closing price, market capitalization, and free float factor for each component stock as of the time the Reference Asset is being calculated.
The Reference Asset is also subject to a divisor, which is adjusted to maintain the continuity of the Reference Asset values across changes due to corporate actions, such as the deletion and addition of stocks, the substitution of stocks, stock dividends, and stock splits.
License Agreement
We have entered into a non-exclusive license agreement with STOXX providing for the license to us and certain of our affiliated or subsidiary companies, in exchange for a fee, of the right to use indices owned and published by STOXX (including the Reference Asset) in connection with certain securities, including the Notes offered hereby.
The license agreement between us and STOXX requires that the following language be stated in this document:
STOXX has no relationship to us, other than the licensing of the Reference Asset and the related trademarks for use in connection with the Notes. STOXX does not:
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sponsor, endorse, sell, or promote the Notes;
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recommend that any person invest in the Notes offered hereby or any other securities;
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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
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·
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consider the needs of the Notes or the holders of the Notes in determining, composing, or calculating the Reference Asset, or have any obligation to do so.
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RBC Capital Markets, LLC
P-9
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Bullish Barrier Enhanced Return Notes
Linked to the EURO STOXX 50® Index,
Due March 1, 2016
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STOXX will not have any liability in connection with the Notes. Specifically:
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·
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STOXX does not make any warranty, express or implied, and disclaims any and all warranty concerning:
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·
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the results to be obtained by the Notes, the holders of the Notes or any other person in connection with the use of the Reference Asset and the data included in the Reference Asset;
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·
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the accuracy or completeness of the Reference Asset and its data;
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·
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the merchantability and the fitness for a particular purpose or use of the Reference Asset and its data;
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·
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STOXX will have no liability for any errors, omissions, or interruptions in the Reference Asset or its data; and
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·
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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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The licensing agreement between us and STOXX is solely for their benefit and our benefit, and not for the benefit of the holders of the Notes or any other third parties.
RBC Capital Markets, LLC
P-10
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Bullish Barrier Enhanced Return Notes
Linked to the EURO STOXX 50® Index,
Due March 1, 2016
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Historical Information
The graph below sets forth the information relating to the historical performance of the Reference Asset. In addition, below the graph is a table setting forth the intra-day high, intra-day low and period-end closing levels of the Reference Asset. The information provided in this table is for the four calendar quarters of 2010, 2011 and 2012, and for the period from January 1, 2013 to February 5, 2013.
We obtained the information regarding the historical performance of the Reference Asset in the chart below from Bloomberg Financial Markets.
We have not independently verified the accuracy or completeness of the information obtained from Bloomberg Financial Markets. The historical performance of the Reference Asset should not be taken as an indication of its future performance, and no assurance can be given as to the Final Level of the Reference Asset. We cannot give you assurance that the performance of the Reference Asset will result in any positive return on your initial investment.
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Period-
Start Date
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Period-
End Date
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High Intra-Day Level
of the Reference Asset
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Low Intra-Day Level
of the Reference Asset
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Period-End Closing Level
of the Reference Asset
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1/1/2010
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3/31/2010
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3,044.37
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2,617.77
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2,931.16
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4/1/2010
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6/30/2010
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3,027.14
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2,448.10
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2,573.32
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7/1/2010
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9/30/2010
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2,849.45
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2,502.50
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2,747.90
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10/1/2010
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12/31/2010
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2,902.80
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2,635.08
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2,792.82
|
||||
|
1/1/2011
|
3/31/2011
|
3,077.24
|
2,717.74
|
2,910.91
|
||||
|
4/1/2011
|
6/30/2011
|
3,029.68
|
2,692.95
|
2,848.53
|
||||
|
7/1/2011
|
9/30/2011
|
2,887.30
|
1,935.89
|
2,179.66
|
||||
|
10/1/2011
|
12/31/2011
|
2,506.22
|
2,054.98
|
2,316.55
|
||||
|
1/01/2012
|
3/31/2012
|
2,611.42
|
2,279.73
|
2,477.28
|
||||
|
4/1/2012
|
6/30/2012
|
2,509.93
|
2,050.16
|
2,264.72
|
||||
|
7/1/2012
|
9/30/2012
|
2,604.77
|
2,142.46
|
2,454.26
|
||||
|
10/1/2012
|
12/31/2012
|
2,668.23
|
2,427.32
|
2,635.93
|
||||
|
1/1/2013
|
2/5/2013
|
2,754.80
|
2,622.65
|
2,651.21
|
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
RBC Capital Markets, LLC
P-11
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|
|
|
|
|
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Bullish Barrier Enhanced Return Notes
Linked to the EURO STOXX 50® Index,
Due March 1, 2016
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|
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|
SUPPLEMENTAL PLAN OF DISTRIBUTION (CONFLICTS OF INTEREST)
We expect that delivery of the Notes will be made against payment for the Notes on or about February 28, 2013, which is the third (3rd) business day following the Pricing Date (this settlement cycle being referred to as “T+3”). See “Supplemental Plan of Distribution” in the prospectus supplement dated January 28, 2011. For additional information as to the relationship between us and RBCCM, please see the section “Plan of Distribution—Conflicts of Interest” in the prospectus dated January 28, 2011.
SUPPLEMENTAL DISCUSSION OF
U.S. FEDERAL INCOME TAX CONSEQUENCES
The following disclosure supplements the discussion in the product prospectus supplement dated January 28, 2011 under “Supplemental Discussion of U.S. Federal Income Tax Consequences.”
Dividend Equivalent. A “dividend equivalent” payment is treated as a dividend from sources within the U.S. and such payments generally would be subject to a 30% U.S. withholding tax if paid to a non-U.S. holder (as defined in the product prospectus supplement). Under recently proposed U.S. Treasury Department regulations, certain payments that are contingent upon or determined by reference to U.S. source dividends, including payments reflecting adjustments for extraordinary dividends, with respect to equity-linked instruments, including the Notes, may be treated as dividend equivalents. If enacted in their current form, the regulations will impose a withholding tax on payments made on the Notes on or after January 1, 2014 that are treated as dividend equivalents. In that case, we (or the applicable paying agent) would be entitled to withhold taxes without being required to pay any additional amounts with respect to amounts so withheld. Further, non-U.S. holders may be required to provide certifications prior to, or upon the sale, redemption or maturity of the Notes in order to minimize or avoid U.S. withholding taxes.
Foreign Account Tax Compliance Act. The Internal Revenue Service has issued notices and the Treasury Department has issued final regulations affecting the legislation enacted on March 18, 2010 and discussed in the product prospectus supplement under “Supplemental Discussion of U.S. Federal Income Tax Consequences—Supplemental U.S. Tax Considerations—Legislation Affecting Taxation of Notes Held By or Through Foreign Entities.” Pursuant to the final regulations, withholding requirements with respect to payments made on the Notes will generally begin no earlier than January 1, 2014, and the withholding tax will not be imposed on payments pursuant to obligations outstanding on January 1, 2014. Account holders subject to information reporting requirements pursuant to the Foreign Account Tax Compliance Act may include holders of the Notes. Holders are urged to consult their own tax advisors regarding the implications of this legislation and subsequent guidance on their investment in the Notes.
RBC Capital Markets, LLC
P-12
| |
RBC Capital Markets® |
|
|
EQUITY LINKED NOTE I RBC STRUCTURED NOTES GROUP
|
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Bullish Barrier Enhanced Return Notes Linked to the EURO STOXX 50® Index,
Due March 1, 2016
|
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INVESTMENT THESIS
|
|
·
|
Receive a [120%-130%] leveraged return if the Percentage Change of the Reference Asset is positive (to be determined on the Pricing Date).
|
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·
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Subject to one-for-one loss of the principal amount if the Final Level is less than the Barrier Level.
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PRELIMINARY KEY TERMS
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·
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Reference Asset: EURO STOXX 50® Index (SX5E)
|
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·
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Leverage Factor: [120%-130%], to be determined on the pricing date
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·
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Barrier Level: 70% of the Initial Level
|
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·
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Percentage Change: Final Level - Initial Level
Initial Level
|
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KEY RISK FACTORS
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·
|
The notes are subject to Royal Bank of Canada’s credit risk.
|
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·
|
The notes are not 100% principal protected.
|
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·
|
Your notes are likely to have limited liquidity.
|
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TAX
|
|
·
|
Each investor will agree to treat the notes as a pre-paid cash-settled derivative contract for U.S. federal income tax purposes, as described in more detail in the product prospectus supplement.
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ORDER DEADLINE
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·
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RBCCM will accept orders to purchase the notes until February 22, 2013.
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 |
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CUSIP: 78008SYW0
|
I
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PRICING DATE: February 25, 2013
|
I
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ISSUE DATE: February 28, 2013
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IRS Circular 230 Notice: To ensure compliance with IRS Circular 230, you are hereby notified that: (a) any discussion of federal tax issues contained or referred to herein is not intended or written to be used, and cannot be used, by you for the purpose of avoiding penalties that may be imposed on you under the Internal Revenue Code; (b) such discussion is written in connection with the promotion or marketing by us of the transactions or matters addressed herein; and (c) you should seek advice based on your particular circumstances from an independent tax advisor.
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