Royal Bank of Canada introduces new NVCC AT1 Limited Recourse Capital Notes offering

Royal Bank of Canada announces NVCC AT1 Limited Recourse Capital Notes issue

“In a groundbreaking move, the Royal Bank of Canada (TSX: RY) (NYSE: RY) has announced the offering of US$1.0 billion of non-viability contingent capital (NVCC) Additional Tier 1 (AT1) Limited Recourse Capital Notes, Series 4 (LRCNs). This strategic financial move is set to make waves in the investment world and signals a new era of financial instruments from one of Canada’s leading banks.

Interest at 7.500 percent annually will be payable quarterly on the LRCNs until May 2, 2029. After this initial period, the interest rate will reset every five years based on the U.S. Treasury Rate plus 2.887 percent, with a maturity date of May 2, 2084. The closing date of this offering is scheduled for April 24, 2024, subject to standard closing conditions.

Breaking Down the Details

RBC Capital Markets, along with other notable financial institutions, will act as joint book-running managers for this offering. The bank will also issue NVCC Non-Cumulative 5-Year Fixed Rate Reset First Preferred Shares, Series BV, to be held in a Limited Recourse Trust for added security. This structure ensures that in the event of non-payment, the recourse of LRCN holders will be limited to their proportionate share of the trust’s assets.

Looking Towards the Future

The bank retains the option to redeem the LRCNs periodically, with specific conditions outlined for such actions. The net proceeds from this transaction will be used for general business purposes, highlighting the bank’s commitment to strategic financial management and growth.

A Call to Investors

For those interested in participating in this offering, a registration statement has been filed with the U.S. Securities and Exchange Commission (SEC) and is now effective. Potential investors can access the prospectus supplement and base prospectus for more information. This landmark offering should not be missed by savvy investors looking to capitalize on innovative financial opportunities.

In Conclusion

The Royal Bank of Canada’s latest move sets a new standard in the financial industry, showcasing innovative ways to raise capital while providing security for investors. The implications of this offering are far-reaching and could pave the way for similar strategies in the future. As the financial landscape continues to evolve, adaptability and foresight will be key in navigating the ever-changing world of investments.”



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