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Email this2:55 pm
May 28, 2013
Offline
I'm wondering if anyone knows or understands what this thing is:
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RBC Non-Inversion Note
Short Description: Yield Curve Non-Inversion Daily Range Accrual Deposit Notes
Maturity: November 22, 2023
Coupon: [5.50 - 5.70]% x n/N, where "n" is the number of days in the Coupon Period the Reference Rate satisifes the Reference Range and, "N" is the total number of days in the Coupon Period
Price: $100.00 CDN per $100 par value.
Yield to Maturity: N/A
Settlement: November 22 2013.
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I got that in an email from RBC as a "new issue", and really do not know if it is a good deal or not. Any comments? Thanks!
9:56 pm
August 1, 2013
Offline
Rhvic, I would stay away from this so called RBC Non-Inversion Note. These big global banking financial institutions create new financial products to make sure that people stay confused about investing and personal finances.
Everyone is starved for income and yield and this is just another ploy to make something look much more attractive than really exists.
I would not be surprised if any broker, financial, investment adviser etc. is getting a 5% to 7% commission selling these things.
Just to give you an idea, an Ontario 2023-December-2 strip bond yields net 3.64% and a Hydro-Quebec 2023-August-15 strip bond yields net 3.68%.
A Quebec 2023-September-1 coupon bond yields net 3.29%, a New Brunswick 2023-June-2 coupon bond yields net 3.32% and an Ontario 2023-June-2 coupon bond yields net 3.29%.
How can a $100 par RBC coupon bond or note have a 5.50% to 5.70% coupon which is paying 52% to 71% higher interest annually compared to less risky provincial bonds, provincial strip bonds.
The first rule of investing, buying, selling or doing any transaction for me is if I don't understand it, caveat emptor, buyer beware. 
Anything that seems too good to be true, most likely it is. Stay way from this thing or you will regret it.
9:23 am
May 28, 2013
Offline
SD2013, perhaps you can make sense of further info on this issue. From the prospectus which is on the RBC site:
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Description: 10 YR CMS Non-Inversion Note, Coupon will be fixed prior to settlement. The coupon will be fixed at a minimum rate of 5.50% and as high as 5.70% depending on market conditions
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Investment Objective Enhance potential returns by taking the view that the yield curve will remain positive
and upward sloping between 10 and 30 Years.
Issuer Royal Bank of Canada
Credit Rating Moody’s: Aa3; S&P: AA-; DBRS: AA
Issue Type Yield Curve Non-Inversion Daily Range Accrual Deposit Notes
Semi-Annual Coupons
Senior Deposit Notes - Book Based Via CDS
Issue Size $ ● CAD
Settlement Date 22-November-13
New Issue Price $100.00
Maturity Date 22-November-23
Coupon [5.50 – 5.70%] per annum times N/D;
Where “N” is the total number of calendar days in the applicable interest period on
which the High-Side reference rate exceeds the Low-Side reference rate by an
amount equal to or above minimum spread level specified in the Reference Spread
Range; and “D” is the total number of calendar days in the applicable interest period.
Reference Spread: High-Side Reference Rate minus Low-Side Reference Rate
The Reference Spread on any date that is not a business day shall be the applicable
Reference Spread calculated for the immediately preceding business day.
High-Side Reference Rate: 30 Year CAD CMS Rate
The 30 Year CAD CMS Rate on any day is the 30 year Canadian dollar constant
maturity swap rate (or CMS Rate) as at 11 a.m., Toronto time, as quoted on
Bloomberg page "RBCL". The 30 Year CAD CMS Rate on any day that is not a
Business Day shall be the applicable 30 Year CAD CMS Rate as of the immediately
preceding Business Day.
Low-Side Reference Rate: 10 Year CAD CMS Rate
The 10 Year CAD CMS Rate on any day is the 10 year Canadian dollar constant
maturity swap rate (or CMS Rate) as at 11 a.m., Toronto time, as quoted on
Bloomberg page "RBCL". The 10 Year CAD CMS Rate on any day that is not a
Business Day shall be the applicable 10 Year CAD CMS Rate as of the immediately
preceding Business Day.
Reference Spread Range Where the Reference Spread is greater than or equal to 0.00%
Interest Payment Date Fixed interest payments shall be made semi-annually on the 22 day of each May and
November, commencing May 22, 2014 and ending on the Maturity Date.
Payment Period Each period from and including a Payment Date (or, if none, the date of Settlement) to
but excluding the next following Payment Date.
Day Count Actual/365
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I speak a few languages, but not that one!
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